How oil price decline impacts Nigeria's production

Oil prices have been on a downward trend, with Brent hovering around $63 to $64 per barrel, significantly lower than the $70s of previous weeks. This decline has raised concerns for Nigeria, whose economy heavily depends on oil revenue and foreign exchange earnings. Olufunmilola Adebowale, Head of Research at Parthian Partners, highlighted the potential impact on Nigeria's 2025 budget, which has a benchmark of $75 per barrel. Adebowale noted that the recent drop in oil prices is due to recession fears triggered by escalating trade tensions. The ongoing trade war, particularly with the US imposing tariffs, has led investors to anticipate a global economic downturn, thereby reducing the demand for oil. Analysts predict that this downward trend may persist amidst geopolitical uncertainties. Nigeria, as a major oil-producing country, faces challenges in meeting its financial targets due to the lower oil prices. Adebowale suggested potential measures such as tax increases to bridge the revenue gap. Additionally, concerns about production disruptions, such as the recent instability in River State, further compound the economic challenges faced by Nigeria. Adebowale's insights shed light on the complexities of managing Nigeria's economy amidst volatile oil markets and global trade risks. OPEC's recent decision to increase oil production quotas may face revision in response to the declining prices. Adebowale emphasized the importance of OPEC's role in stabilizing oil prices and supporting oil-producing countries like Nigeria. The discussion also delved into the financial performance of oil companies, notably Total Energies, which reported a significant rise in revenue and profits for the year 2024. Despite cost increases in operations, major players in the industry demonstrated resilience and robust financial performances. Adebowale highlighted the positive market responses to the earnings releases, with Total's stock price surging by 10% following the dividend announcement. The overall equities market, however, faced bearish trends influenced by global economic uncertainties. Adebowale's analysis provided valuable insights into the dynamics of the oil market, corporate earnings, and stock market movements, offering stakeholders a comprehensive view of the challenges and opportunities in Nigeria's oil sector.