Nigeria’s Crude Oil Price Drops By 7%

Nigeria’s crude oil fell to $72 per barrel yesterday, down from $75 per barrel, representing an 8.2 percent decline compared to the $77.96 per barrel benchmark set in Nigeria’s 2024 budget.

Reports show that the prices of Bonny Light and other crude oils have decreased significantly due to Israel’s restrained response to Iran’s missile attack, which had initially raised fears of substantial disruptions to oil supply and pricing.

Earlier, the Organisation of Petroleum Exporting Countries (OPEC) reported that Nigeria’s oil production, excluding condensate, decreased to 1.324 million barrels per day (bpd) in September 2024, down from 1.352 million bpd in August 2024, marking a 2 percent reduction.

In a similar vein, the Nigerian Upstream Petroleum Regulatory Commission (NUPRC) noted that Nigeria’s total oil output, including condensate, fell to 1.544 million bpd in September 2024, a decline from 1.570 million bpd in August 2024, indicating a month-on-month decrease of 1.7 percent.

This situation suggests that Nigeria is facing shortfalls in oil prices and production, leading many experts to express concerns about the country’s ability to meet its budget projections for 2024.

In response, Mazi Colman Obasi, the National President of the Oil and Gas Services Providers Association of Nigeria (OGSPAN), emphasized that after decades of oil and gas production, Nigeria should have leveraged its petroleum revenues to foster development in the non-oil sectors of the economy.

“The nation have been producing oil and gas since the 1950s. We have been over-depending on oil and gas instead of using them as a means to develop other sectors of the economy. It is very dangerous to put our eggs in one basket,” Obasi told Vanguard in a recent interview.

Drop In Crude Oil Price Will Affect Our Foreign Revenue

On his part, the Director/CEO of the Centre for the Promotion of Private Enterprise, CPPE, Dr. Muda Yusuf, said: “Obviously, the drop in oil price will affect our revenue, particularly our foreign reserve. This is not a good development for our foreign reserves.

“The question is how much has NNPCL be remitting to the coffer, as the impact may not be shown because there has been little contribution from that end. But I can tell you for certain that there is no crude oil drop that will bring down our energy cost. It is a major variables to the cost of fuel, diesel, Kerosene, gas, etc and not necessarily Nigerians been affected.

“Relating it to the citizens, if energy price drops, the impact will be felt on the citizens positively, when the price goes up the beneficiaries are the government and operators. This does not necessarily trickle down to the common man.

“My advice to shore up operation will be for the government to give incentives to operators or investors, provide investors confidence which has be lost over the years, thereby sending investment and investors out of the country. Also, there is a need for clarity in government policies, which is also key in driving the needed investment into the country’s economy.”

The Chief Executive of the Nigerian Upstream Petroleum Regulatory Commission (NUPRC), Engr. Gbenga Komolafe stated that the completion of the various asset divestments by International Oil Companies (IoCs) is expected to increase production.