Nigeria is bracing for severe economic shocks as Brent crude prices plunged to $59.25 per barrel—well below the government’s benchmark of $75 set for the 2025 federal budget—raising alarm over widening fiscal deficits, currency depreciation, and strained public finances.
The 2025 budget was built on optimistic projections: an oil price of $75 per barrel, daily production of 2.06 million barrels, and an exchange rate of N1,500 to the US dollar.
However, real-world data paints a grim picture. Crude production fell short, averaging 1.737 million barrels per day in January and 1.672 million in February, according to Ministry of Finance figures.
“This is a textbook case of vulnerability from overdependence on oil,” said Dr. Doyin Salami, former Chief Economic Adviser to the President.
“We’re facing a scenario where both volume and price are underperforming, and the naira is reacting accordingly. Without immediate fiscal recalibration, this could spiral into a full-blown economic crisis.”
Meanwhile, the exchange rate breached N1,600/$ on both the official and parallel markets in April, placing additional pressure on dollar-denominated revenues and increasing the cost of external obligations.
“Nigeria’s ability to defend the naira depends heavily on dollar inflows,” said Bismarck Rewane, CEO of Financial Derivatives Company. “If oil earnings dwindle and foreign investors lose confidence, the CBN’s buffer will erode quickly.”
With oil prices and output both lagging, Nigeria faces a projected revenue shortfall of up to N19.6 trillion, according to independent economic research estimates.
If the trend persists, the fiscal deficit could surge from the projected N13 trillion to as high as N30.79 trillion, forcing the government to consider more borrowing, deep expenditure cuts, and intensified efforts at non-oil revenue generation.