Brent Crude Slumps to $62 Amid OPEC+ Production Hikes; Budget Shortfall Deepens
Nigeria’s 2025 fiscal plan is under significant strain as global crude oil prices continue to hover below the federal benchmark of $75 per barrel. As of Tuesday, Brent crude, the nation’s primary oil benchmark, recovered slightly to $62.03 after hitting an intraday low of $58.50 — its weakest level since February 2021. West Texas Intermediate (WTI) also edged up to $58.94, still far below earlier projections.
This sustained price dip, driven by OPEC+’s decision to accelerate oil production hikes, is creating a $15 per barrel shortfall for Nigeria. The gap threatens to derail the country’s ₦55 trillion 2025 budget, which is heavily reliant on oil revenue for funding national development and meeting debt obligations.
Budget Deficit Looms as Production Falls Short
Compounding the problem, Nigeria has failed to meet its daily crude oil production target of 2.06 million barrels per day (bpd), producing only about 1.6 million bpd in March, even with condensate inclusion. This double hit — falling prices and underproduction — has widened Nigeria’s revenue gap and increased fiscal vulnerabilities.
Economists are warning that unless urgent measures are taken, Nigeria may be headed for a deeper fiscal crisis. Dr. Muda Yusuf, CEO of the Centre for the Promotion of Private Enterprise (CPPE), emphasized the need to restructure budget projections and realign spending priorities.
“The drop in crude oil prices could significantly disrupt budget implementation. Without adjustments, macroeconomic instability is inevitable,” Yusuf said.
Fiscal Pressures Threaten Macroeconomic Stability
Experts stress that reduced oil revenue has far-reaching implications. Oil contributes less than 10% to Nigeria’s GDP, yet it supplies over 80% of foreign exchange inflows. This imbalance is already impacting the naira, which trades at over ₦1,600/$ — well above the ₦1,400 exchange rate assumed in the budget.
Professor Uche Uwaleke, a renowned capital market analyst, warned that this FX pressure could lead to higher inflation, elevated interest rates, and restricted credit availability, ultimately stalling economic growth.
“Budget deficits and weaker reserves will force more borrowing, increasing the debt-to-GDP ratio and reducing spending on essential sectors,” he cautioned.
Calls for Spending Cuts and Fiscal Discipline Intensify
Leaders across Nigeria’s economic and labor sectors are urging the government to curb spending and address leakages. Dele Oye, President of the Nigerian Chamber of Commerce, Industry, Mines and Agriculture (NACCIMA), pointed to unnecessary expenditures such as a $700 million port renovation contract, questioning the sustainability of such fiscal choices.
Similarly, the Nigeria Labour Congress (NLC) warned that a drop in crude prices could reduce social welfare spending and threaten workers’ salaries. NLC spokespersons emphasized the need for fiscal discipline and transparency in budget allocation to prevent further economic hardship for citizens.
Global Analysts Cut Oil Price Forecasts Amid OPEC+ Output Surge
International investment banks have reacted to OPEC+’s decision to increase output by revising their oil price forecasts downward. Goldman Sachs now expects Brent crude to average $60 per barrel in 2025, while Barclays and Morgan Stanley have also lowered their projections due to anticipated supply surpluses.
Morgan Stanley, in particular, forecasts a global oil glut of 1.1 million bpd in the second half of the year, further depressing prices and tightening Nigeria’s fiscal outlook.
Outlook: Government Urged to Recalibrate Budget Strategy
With the excess crude account unfunded and oil revenues plummeting, stakeholders are pressing the federal government to recalibrate spending, prioritize critical sectors, and implement long-term solutions to diversify the economy.
Dr. Chijioke Ekechukwu of Bristol Investments emphasized that Nigeria must avoid excessive borrowing, as increased debt service costs could stifle national development.
As global oil dynamics shift, Nigeria’s economic resilience hinges on swift policy adjustments, expenditure realignment, and sustained efforts to stabilize both currency and inflation.
