….Lowest Level Since 2021
…Sparking Economic Concerns
By Niyi Jacobs
The recent drop in crude oil prices to below $70 per barrel, the lowest level since December 2021, has raised concerns about the impact on Nigeria’s economy and the naira.
The global benchmark, Brent crude, fell by 2.8% due to strong supply, demand concerns, and speculative selling. This decline in oil prices is expected to put additional pressure on the naira, which has already weakened to nearly N1,600/$ in recent weeks.
The drop in oil prices presents a challenge for the federal government, which had set a benchmark crude oil price of $77 per barrel in the 2024 budget. The government had anticipated higher oil prices to fund its budget and meet its revenue targets. However, with oil prices now below $70, the government may struggle to meet its revenue targets, which could lead to a budget deficit and further pressure on the naira.
Furthermore, crude oil production in Nigeria has not met the set production benchmark, and the country has been unable to meet OPEC’s set quota for crude oil production. This has resulted in lower revenue for the government and has put additional pressure on the naira.
On the other hand, lower crude oil prices could result in lower petrol prices, which would be a relief for Nigerians who have seen prices soar in recent weeks. However, the ongoing dispute between authorities and Dangote Refinery over petrol pricing has worsened the situation for Nigerians, who are already enduring a severe cost-of-living crisis.
The drop in oil prices has also raised concerns about the impact on Nigeria’s economic growth. The country’s economy is heavily reliant on oil exports, and a prolonged period of low oil prices could lead to slower economic growth and higher unemployment.
In conclusion, the recent drop in crude oil prices to below $70 per barrel has raised concerns about the impact on Nigeria’s economy and the naira. The government may struggle to meet its revenue targets, and the country’s economic growth may be impacted. However, lower crude oil prices could result in lower petrol prices, which would be a relief for Nigerians.
