Fresh concerns arose as Nigeria’s crude oil price dropped to $72 per barrel, down from $75, marking an 8.2 per cent gap from the $77.96 per barrel benchmark in the 2024 budget. This decline highlights the challenge of meeting the country’s fiscal projections amidst a volatile oil market.
According to industry analysis, the price of Bonny Light and other Nigerian crude grades declined following Israel’s restrained response to Iran’s missile strike, a reaction anticipated to significantly impact oil prices.
In addition, the Organisation of Petroleum Exporting Countries (OPEC) reported that Nigeria’s oil output (excluding condensate) fell to 1.324 million barrels per day (bpd) in September, down from 1.352 million bpd in August, a 2 per cent drop. The Nigerian Upstream Petroleum Regulatory Commission (NUPRC) confirmed that, including condensate, production fell from 1.570 million bpd in August to 1.544 million bpd in September, reflecting a 1.7 per cent month-on-month decline.
The simultaneous drop in price and output raises doubts about Nigeria’s ability to meet its 2024 budget goals.
Over-Reliance on Oil, Say Experts
Mazi Colman Obasi, National President of the Oil and Gas Services Providers Association of Nigeria (OGSPAN), voiced concerns, stating, “After decades of oil production, Nigeria should have leveraged petroleum earnings to develop its non-oil sector. Relying solely on oil and gas poses substantial risks.”
Dr. Muda Yusuf, Director/CEO of the Centre for the Promotion of Private Enterprise (CPPE), warned, “The drop in oil price impacts our revenue and foreign reserves. However, since NNPCL’s contributions have been minimal, this may not reflect immediately. Nonetheless, oil price fluctuations directly affect the costs of fuel, diesel, kerosene, and gas.”
Yusuf added that while a decrease in energy prices could benefit citizens, the gains tend to favour the government and major operators rather than trickling down to the average Nigerian. He suggested that to attract investment, the government must create a conducive environment by providing incentives and clear policies to restore investor confidence.
Path to Increased Production
Engr. Gbenga Komolafe, Chief Executive of the Nigerian Upstream Petroleum Regulatory Commission (NUPRC), expressed optimism, stating that ongoing asset divestments by international oil companies (IOCs) could result in production increases.