PLAN by the Organisation of Petroleum Exporting Countries (OPEC) and its allies, OPEC+, to increase crude oil output, coupled with falling crude oil, is likely to impact Nigeria’s 2025 budget implementation, The ICIR reports.
OPEC announced the rise in quota for its members at its OPEC+ meeting on Monday, March 3.
The meeting was held by eight countries that previously announced additional voluntary adjustments in April and November 2023 to review global market conditions.
The countries include Saudi Arabia, Russia, Iraq, the United Arab Emirates, Kuwait, Kazakhstan, Algeria, and Oman.
The ICIR reports that on Friday, February 28, President Bola Tinubu signed N54.99 trillion 2025 budget into law, initially put at N49.7 trillion, representing a 99.96 per cent rise from the 2024 budget.
The upward adjustment was driven by N1.4 trillion in additional revenue from the Federal Inland Revenue Service (FIRS), N1.2 trillion from the Nigeria Customs Service (NCS), and N1.8 trillion generated by other government-owned agencies.
While presenting the 2025 budget to the National Assembly on December 18, 2024, the president highlighted that the government was targeting N34.8 trillion in revenue to fund the budget of which the bulk of the revenue will come from crude oil proceeds.
He projected that oil revenue would bring in N19.6 trillion while non-oil sources would come in N15.22 trillion.
He set a 2.06 million barrels per day (bpd) crude oil production target at a benchmark rate of $75perr per barrel and adjusted the exchange rate benchmark to N1,500 per dollar.
Nigeria has been struggling to meet OPEC’s daily crude oil production quota of 1.5 million bpd, which it has continued to blame largely on insecurity and infrastructure decay.
Checks by The ICIR showed that crude oil prices have averaged $73 since the beginning of the year amid Nigeria’s challenges in meeting the daily benchmarked crude oil production target.
On Monday, March 3, Brent crude oil price declined marginally to $71.42 per barrel, from $72.81.
These raise concerns following the projection by analysts that crude oil prices would average and hover around $70 per barrel, with some fluctuations depending on the specific benchmark.
According to sources, including Statista, a research firm, Brent crude oil is projected to average an annual spot price of $74.5 per barrel in 2025.
The OPEC said its OPEC+ members had taken into account the healthy market fundamentals and the positive market outlook.
It stated, “They reaffirmed their decision agreed upon on December 5, 2024, to proceed with a gradual and flexible return of the 2.2 million barrrels per day (mbd) voluntary adjustments starting on 1st April 2025 while remaining adaptable to evolving conditions.
“Accordingly, this gradual increase may be paused or reversed subject to market conditions. This flexibility will allow the group to continue to support oil market stability.”
It said the eight countries reiterated their collective commitment to full conformity with the additional voluntary production adjustments as agreed under the 53rd Meeting of the joint ministerial monitoring committee (JMMC) on April 3, 2024.
It stated further that the OPEC+ members also confirmed their intention to fully compensate for any overproduced volumes since January 2024 by the compensation plans submitted to the OPEC Secretariat, ensuring that all compensations are completed by June 2026.
“The countries with overproduced volumes have also agreed to frontload their compensation plans, so that more of the overproduced volumes are compensated in the earlier months of the compensation period, and will submit their updated compensation schedules to the OPEC Secretariat by the 17th of March 2025 which will be posted on the Secretariat’s website,” OPEC added.