Budget deficit may widen as crude oil price drops to $60

Nigeria’s N13 trillion budget deficit for 2025 may widen with the continuous drop in the price of crude oil, Daily Trust can report.

It was gathered that crude oil, which makes the huge chunk of the government’s revenue, was benchmarked at $75 per barrel but external shocks like the tariff imposed by US President Donald Trump and approval for increase in oil production by the Organisation of Petroleum Exporting Countries (OPEC), among other factors, have seen oil prices dropping consistently in recent times.

This would further put a strain on the N35.05 trillion budgeted as projected revenue for the year from 54.99tr.

Already, the country has been falling behind the 2.06m barrels per day assumptions on which the budget was predicated.

Data from the Nigerian Upstream Petroleum Regulatory Commission (NUPRC) showed the country produced 1,737,480; 1,671,953 and 1,603,776 barrels of crude oil and condensate per day in January, February and March respectively.

This means that the country failed to meet up with 1,166,791 bpd and in turn lost $85.5m.

According to Reuters, the price of crude oil fell more than 1% on Monday after OPEC+ decided over the weekend to further speed up oil output hikes, spurring concerns about more supply coming into a market clouded by an uncertain demand outlook.

Brent crude further dropped by 70 cents, or 1.14%, to $60.59 a barrel while US West Texas Intermediate crude was at $57.54 a barrel, down 75 cents, or 1.29%.

It said the price is the lowest since April 9 after OPEC+ agreed to accelerate oil production hikes for a second consecutive month, raising output in June by 411,000 barrels per day (bpd).

“The June increase from the eight producers in the OPEC+ group will take the total combined hikes for April, May and June to 960,000 bpd, representing a 44% unwinding of the 2.2 million bpd of various cuts agreed on since 2022, according to Reuters calculations.”

Daily Trust reports that the development is threatening the implementation of the programmes in the 2025 budget amidst shocks in the economy.

The International Monetary Fund (IMF) recently observed that Nigeria’s economic outlook is marked by significant uncertainty, hinging this on “elevated global risk sentiment and lower oil prices.”

An economist, Dr Muda Yusuf, said the IMF’s advisory had warned that Nigeria’s economy is highly vulnerable.

He said, “Nigeria’s economy is highly vulnerable to development around commodity prices particularly crude oil price. We are vulnerable because we are highly dependent on crude oil.

“So if, as a result of the current developments in the global economy, there’s a major global downturn, if the current decline in crude oil prices persists, then it has very serious implications for our foreign exchange earnings and revenue.”