Nigeria is bracing for renewed financial challenges as global oil prices drop sharply, slipping beneath the $60 per barrel mark. This slump is casting a shadow over the nation’s economic prospects, threatening both its currency stability and widening its already stretched fiscal deficit.
Brent crude, a key benchmark, has recently fallen to around $59.25 per barrel — well below the $75 figure on which Nigeria’s 2025 budget is based. Adding to concerns, the country’s oil production has failed to meet targets, averaging just 1.67 million barrels per day in February, compared to the planned 2.06 million.
Economists warn that if these trends continue, Nigeria could miss out on nearly N19.6 trillion in expected oil revenues this year. The shortfall comes at a time when the naira has already weakened, sliding past N1,600 to the dollar in recent months — surpassing the government’s projection of N1,500.
With oil revenue forming the backbone of Nigeria’s economy, the implications are significant. Analysts suggest that the country’s fiscal deficit could swell from the projected N13 trillion to over N30 trillion, forcing policymakers to consider new borrowing, drastic spending cuts, and intensified efforts to boost non-oil income.
Pressure is also mounting on the Central Bank of Nigeria (CBN) to defend the currency. Although the CBN has managed to stabilize the naira temporarily through interventions supported by foreign reserves, experts caution that persistently low oil prices could erode this buffer.
Despite Nigeria’s recent economic reforms, including fuel subsidy removal and foreign exchange market liberalization, investor sentiment remains cautious. Joyce Chang of JPMorgan Chase acknowledged the country’s progress but highlighted ongoing risks, particularly from fluctuating oil markets and global trade tensions.
Complicating matters further, recent OPEC+ decisions to increase oil output are expected to maintain downward pressure on prices. Nigeria, already struggling with internal production issues such as pipeline vandalism and aging infrastructure, finds itself unable to take advantage of these output hikes.
Market forecasts suggest that low prices may persist. Analysts at Barclays predict Brent crude will average $66 this year, falling to around $60 in 2026, while broader surveys hint at a prolonged period of weak prices amid rising supply and cooling demand.
As Nigeria navigates these headwinds, the nation’s ability to stabilize its finances and maintain currency stability will be tested in the months ahead.
