Breaking: Nigeria Faces Economic Turmoil As Crude Oil Prices Dive By 7%

Breaking: Nigeria Faces Economic Turmoil As Crude Oil Prices Dive By 7%

Nigeria’s crude oil price fell to $72 per barrel yesterday, down from $75 per barrel, reflecting an 8.2% decline compared to the $77.96 per barrel benchmark established in the country’s 2024 budget. Reports indicate that the prices of Bonny Light and other crude oils have significantly decreased..……CONTINUE READING 

following Israel’s measured response to Iran’s missile attack, which had initially sparked concerns about major disruptions to oil supply and pricing.

Earlier, the Organisation of Petroleum Exporting Countries (OPEC) revealed that Nigeria’s oil production, excluding condensate, decreased to 1.324 million barrels per day (bpd) in September 2024, down from 1.352 million bpd in August 2024, marking a 2% reduction.

Similarly, the Nigerian Upstream Petroleum Regulatory Commission (NUPRC) noted that Nigeria’s total oil output, including condensate, dropped to 1.544 million bpd in September 2024, down from 1.570 million bpd in August 2024, indicating a month-on-month decrease of 1.7%.

This decline in oil prices and production raises concerns among experts regarding Nigeria’s ability to meet its budget projections for 2024.

In response, Mazi Colman Obasi, the National President of the Oil and Gas Services Providers Association of Nigeria (OGSPAN), emphasized that after decades of oil and gas production, Nigeria should have utilized its petroleum revenues to develop non-oil sectors of the economy. “The nation has been producing oil and gas since the 1950s. We have become overly reliant on these resources instead of leveraging them to develop other sectors. It’s risky to put all our eggs in one basket,” Obasi stated in a recent interview with Vanguard.

Impact of Crude Oil Price Drop on Foreign Revenue
Dr. Muda Yusuf, Director/CEO of the Centre for the Promotion of Private Enterprise (CPPE), remarked, “Clearly, the drop in oil prices will impact our revenue, particularly affecting our foreign reserves. This development is unfavorable for our foreign reserves.”

He questioned the extent of remittances from the Nigerian National Petroleum Corporation Limited (NNPCL), noting that the impact might not be immediately visible due to minimal contributions from that sector. “However, it’s certain that no drop in crude oil prices will reduce our energy costs. Crude oil remains a key factor influencing the prices of fuel, diesel, kerosene, gas, and more—not just impacting Nigerians directly.”

Dr. Yusuf suggested that to enhance operations, the government should offer incentives to operators and investors, restoring the confidence that has been lost over the years. He stressed the need for clarity in government policies to attract necessary investments into the country’s economy.

Engr. Gbenga Komolafe, Chief Executive of NUPRC, stated that the completion of various asset divestments by International Oil Companies (IOCs) is expected to boost production.