NIGERIA’s 2025 budget will most likely face implementation challenges with the consistent drop in crude oil price, hitting its lowest level at $65 per barrel in 4 years at the weekend.

Nigeria relies hugely on the proceeds from its oil resources to fund a large chunk of its national budget. However, a drop from the $75 per barrel benchmark will cause possible upset while increasing the chances of further borrowing from the government.

The 2025 budget of N54.99 trillion signed into law by President Bola Tinubu on Friday, February 28, shows a crude oil budgetary benchmark price of $75 per barrel, a 2.06 million barrels per day (bpd) production target at an exchange rate of N1,500 per dollar.

A further highlight is that the government is targeting N34.8 trillion in revenue to fund the budget, of which the bulk of the revenue will come from crude oil proceeds.

It projects that crude oil will bring in N19.6 trillion in revenue, while non-oil sources would come in at N15.22 trillion.

With Nigeria far from meeting its crude oil output benchmark and falling price in crude oil prices, the proper implementation of the 2025 budget appears gloomy.

Crude oil prices have continued on a downward trend in recent times in the international market as the United States (U.S) economic policies tend towards a global trade war.

Since his inauguration on January 20 this year as US President, Donald Trump has been pushing to protect his country’s economy.

This is seen in the many executive orders he signed. Upon resuming office on the first day, he  signed about 41 executive orders.

Since then, the 78-year-old Trump has been on a mantra to ‘make America wealthy again.’

He believes his tariff war policies would restore the US economy to a lost “Golden Age.”

He also believes America for decades has been looted, pillaged, raped and plundered by nations near and far, both friend and foe alike.

On Wednesday, April 2, Trump imposed new tariffs, which came with immediate effect, on over 50 countries, including major trade partners such as China, the European Union (EU), India, and Japan, along with developing economies across Asia, Africa, and Latin America.

These new sweeping tariffs on imports from other countries, which appear to indicate that Trump is intensifying a global trade war, have sent the international markets into a tailspin and challenged long-established free trade norms.

China and the European Union have even vowed retaliation against the levies, The ICIR reported.

On Friday, April 4, Brent crude oil price fell to $65.58 per barrel for the first time in four years.

During the day’s trading, Brent crude price, the global oil benchmark, depreciated by seven per cent to trade at $65.58 — the lowest since April 2021.

The US West Texas Intermediate (WTI) also dropped by 7.35 per cent to 62.03 per barrel.

Reuters reported that the crude oil price dropped as China increased tariffs on US goods in a retaliatory move, sharply intensifying a global trade war that has investors worried about a recession.

Nigeria was also affected by the new sweeping global tariffs on all imports into the US as Trump imposed a 14 per cent tariff on Nigerian goods.

The International Monetary Fund (IMF) and World Trade Organisation (WTO), on their part, have warned that the new tariffs pose a significant risk to the global economy as most economies are passing through a time of sluggish growth.

This is as the drop in oil prices also follows an increase in oil production by the Organisation of Petroleum Exporting Countries (OPEC) and its allies (OPEC+) by 411,000 barrels per day (bpd) in May.

The development came as eight member countries decided to phase out oil output cuts.

The unimaginable drop in crude oil price now puts Nigeria’s budget implementation at risk as the country funds about 75 per cent of the yearly budget from revenues from crude oil sales.

Also of concern, as earlier reported by The ICIR, is that Nigeria has not been meeting its OPEC’s daily crude oil production quota of 1.5 million bpd, which it has continued to blame largely on insecurity and infrastructure decay.

There are further concerns that crude oil prices would average and hover around $70 per barrel, with some fluctuations depending on the specific benchmark.

Sources, including Statista, a research firm, project Brent crude oil to average an annual spot price of $74.5 per barrel in 2025.