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Concerns are rising about how the new energy policy from U.S. President Donald Trump might affect Nigeria’s oil revenues. Trump’s plan to increase the U.S. oil production could lead to a drop in global oil prices, which would hurt Nigeria’s expected oil income.
The Situation: Nigeria’s Budget and Oil Revenue
Recently, Nigeria’s National Assembly approved the 2025 budget, now set at N54.9 trillion. This budget relies heavily on oil revenues, with an expectation of around N19.6 trillion from oil. However, this revenue projection is based on the assumption that oil prices will stay around $75 per barrel.
If global oil prices fall due to increased production from the U.S., Nigeria may struggle to meet its oil revenue target. This could lead to more borrowing and put pressure on Nigeria’s economy.
Analysts also predict that this shift could impact other areas, like remittances from Nigerians abroad and inflation within the country.
Trump’s Energy Policy and its Global Impact
President Trump’s "Drill Baby Drill" policy aims to boost U.S. oil and gas production, primarily for domestic use. However, experts warn that this increase in supply could lead to a global drop in oil prices, which would affect countries like Nigeria that depend on oil exports.
The U.S. is already the world’s largest oil producer, accounting for 22% of global oil production in 2023. If production continues to rise, it could lead to oversupply in the global market, pushing prices lower. This would affect Nigeria’s planned oil revenue based on a $75 per barrel price.
Dr. Muda Yusuf, CEO of the Centre for the Promotion of Private Enterprise (CPPE), explained that the U.S. has significant influence over global oil output and prices. With the U.S. committed to increasing its oil production, it could directly impact Nigeria’s oil earnings.
Additionally, Trump’s administration may use its diplomatic influence to shape global oil production, including working to resolve global conflicts, such as the Russia-Ukraine and Israel-Hamas crises. A resolution to these conflicts could lead to increased oil production from Russia, further affecting global oil prices.
Possible Benefits for Consumers
While the drop in oil prices may hurt Nigeria's budget, there could be some positive effects for consumers. Analysts suggest that lower global energy prices, including for products like petrol, diesel, and jet fuel, may provide some relief for individuals worldwide.
Conclusion
In conclusion, while President Trump’s energy policy could offer benefits to consumers in the form of lower fuel costs, it also poses significant risks for countries like Nigeria that rely on oil revenues. The potential drop in global oil prices could lead to challenges in meeting budget targets, increased borrowing, and economic strain for the country.
