Global oil prices extended their downward spiral today, as trade tensions and oversupply concerns rattled markets, sending shockwaves to oil-dependent economies like Nigeria.
Global Oil Benchmarks Tumble
Brent crude fell 1.72% to $65.72, while West Texas Intermediate (WTI) crude dropped 1.73% to $61.93 per barrel, and Murban crude followed suit, declining 2.25% to $65.71.
The market downturn stems largely from deepening U.S.-China trade tensions. The United States recently imposed 125% tariffs on Chinese goods, prompting China to retaliate with 84% tariffs on U.S. exports.
Consequently, fears of reduced global demand have mounted. China, being a major oil consumer, faces potential manufacturing slowdowns, which would inevitably shrink its crude import appetite.
Ashley Kelty of Panmure Liberum noted, “The trade war’s uncertainty is a dagger to price stability,” highlighting the fragile sentiment clouding oil markets.
Rising Supply Adds Further Pressure
Meanwhile, supply-side dynamics continue to dampen prices. The Organisation of the Petroleum Exporting Countries and allies (OPEC+) plan to boost production by 411,000 barrels per day starting May.
Even before this scheduled increase, OPEC+ members reported their highest production in eight months.
Additionally, U.S. crude inventories unexpectedly rose by 500,000 barrels during the week ending April 11, intensifying oversupply fears.
According to the U.S. Energy Information Administration (EIA), global oil inventories are likely to increase by 0.6 million barrels daily in the second quarter, further pressuring benchmarks like Brent and WTI.
Volatility Dominates Energy Markets
Earlier this month, volatility gripped markets when WTI and Brent plunged on April 10 amid trade turmoil and supply disruptions, including a Keystone pipeline outage.
Although a temporary rebound followed President Trump’s announcement of paused reciprocal tariffs, the unresolved U.S.-China trade dispute continues to loom over the energy sector.
Currently, Brent crude trades nearly 28% lower year-on-year, hovering around $63 per barrel, while WTI teeters just above $60.
Without a demand recovery, analysts warn that prices could slump toward $50 per barrel.
Natural Gas Rises Despite Oil Downturn
In contrast to oil’s decline, natural gas prices soared. Natural gas surged 8.34% to $3.182 per million British thermal units, driven by seasonal demand and tightening supplies in key markets.
Nevertheless, broader energy stocks suffered. The Energy Select Sector SPDR Fund (XLE) fell 6.79% to $76.77 last week, as investors seized profits.
Major oil giants like Exxon Mobil were not spared, with shares sliding 6.60% to $98.82.
Price Forecasts Cut Amid Economic Woes
Looking ahead, major financial houses are slashing oil price forecasts.
Goldman Sachs trimmed its 2026 Brent prediction to $58 per barrel and WTI to $55, citing increased OPEC+ output and recession risks.
The EIA projects Brent crude will average $68 per barrel in 2025, falling to $61 in 2026.
Analysts Patterson and Manthey of ING noted the shift in Brent’s forward curve into contango, a market structure often associated with oversupply
Nigeria Feels the Ripple Effects
Nigeria, Africa’s largest oil producer, remains highly vulnerable to the ongoing price slide.
Brent crude is Nigeria’s reference benchmark for budgetary projections.
The Federal Government’s 2025 budget is based on a Brent assumption of $73 per barrel. Thus, current market realities present serious revenue risks.
Lower oil prices threaten Nigeria’s ability to fund its budget, service debt obligations, and sustain vital foreign exchange reserves.
Moreover, Nigeria’s dependence on crude exports, which account for about 80% of foreign earnings, means prolonged low prices could pressure the naira and widen the fiscal deficit.
Already, key government revenue sources like crude sales through the Nigerian National Petroleum Company Limited (NNPC Ltd) could come under stress if the downtrend persists.
Beyond fiscal risks, investment flows into Nigeria’s oil sector may slow. Many investors require a stable oil price above $65–$70 per barrel to justify deepwater exploration and production activities.
Russia’s Troubles Echo Nigeria’s Fears
Russia’s Urals crude also slumped to its lowest since 2023, nearing $50 per barrel. Kremlin officials blamed U.S. tariffs for the selloff, describing the market as “extremely turbulent.”
Similarly, Nigerian officials worry that without a price rebound, the nation could face budget revisions or new borrowing pressures.
Watchpoints for Global and Nigerian Markets
As global markets brace for further volatility, traders and policymakers alike are monitoring key developments:
- U.S.-China trade talks: Any progress could revive demand optimism.
- OPEC+ production decisions: Potential cuts or discipline may support prices.
- U.S.-Iran negotiations: Easing geopolitical tensions could stabilise supply fears.
However, the overarching risk remains a global economic slowdown that could suppress energy demand well into 2026.
The EIA warned, “The effect of tariffs on global economic activity is still highly uncertain and could weigh heavily on oil prices going forward.”
For now, the energy market, including Nigeria’s, remains delicately balanced, with prices reacting sharply to every twist in global economic and political developments.