Oil price decline to $73.5 per barrel threatens budget 2025 revenue target.

The price of Nigeria’s Bonny Light crude oil fell by 10.6 percent to $73.53 per barrel from $84.02 per barrel on January 15th, fuelling fears over the achievement of the federal government’s 2025 budget revenue target.

The budget for 2025 is based on a crude oil price benchmark of $75 per barrel, oil production of 2.06 million barrels per day (bpd), and a revenue target of N36.35 trillion, with 56 percent coming from oil sales.

The fall in crude oil price represents a 6.6 percent potential decline in FG’s oil revenue target, which is worsened by the oil output well below the budget benchmark of 2.06 million barrels per day.

According to data from the Nigerian Upstream Petroleum Regulatory Commission (NUPRC), crude oil output stood at 1.737 million bpd in January 2025, up from 1.667 million bpd recorded in the preceding month of December 2024.

Reacting to the development, the Chief Executive Officer, Centre for the Promotion of Private Enterprise, CPPE, Dr. Muda Yusuf, said, “If energy prices fall, of course, that has implications for our revenue. So it’s likely to negatively impact our oil price and our oil revenue, but it may be positive for businesses because a reduction in crude oil price, commodity price, or global oil price typically reduces the cost of petroleum products, including Premium Motor Spirit (PMS), also known as petrol, diesel, and jet fuel.

On his part, the National President of the Oil and Gas Services Providers Association of Nigeria (OGSPAN), Mazi Colman Obasi, said, “Besides negatively impacting the execution of Nigeria’s 2025 budget, it should be noted that low crude oil prices would culminate in low petroleum product prices.” Refiners’ expected drop in refining costs would make this possible.