Goldman Sachs warns of further naira depreciation amid oil slump

The Brent crude is currently trading at $66.62 per barrel, as against the 2025 budget estimate of $75 per barrel.

However, Nigeria’s Bonny Light crude is trading at about $78 per barrel.

According to Bloomberg, this was made known by Goldman Sachs Group Inc. Economist, Andrew Matheny, during an interview where he stated that the natural policy response to lower oil prices is a depreciation of the local currency.

Matheny raised concerns over fiscal slippage for Africa’s largest crude oil producer, given that the oil production assumption in Nigeria’s 2025 budget is already optimistic.

The Federal Government had projected an oil production of 2 million barrels of crude oil per day and assumed an oil benchmark price of $75 per barrel in the 2025 budget. Nigeria’s crude oil production output was about 1.4 million barrels per day in March 2025.

Matteny, during an interview, said, “The natural policy response to lower oil prices is a depreciation of the naira, as this boosts oil revenues in naira terms. Given that the oil-production assumption in the budget is already optimistic, risks are, in our view, tilted toward fiscal slippage.”

The Chief Executive Officer of the Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA), Farouk Ahmed, had earlier this week in Abuja, said the drop in price of crude oil will negatively impact the Nigerian economy, the national reserves, and the naira.

He said, “If we lose the price of crude by $10, you can see the negative impact on our economy, on our national reserves and the strength of our naira.’

Participants in the foreign exchange market remain optimistic despite this minor decline in exchange rates. There was an inflow of $847 million through the NAFEM window, up from $795 million the previous week.

Initial market tensions were driven by increased demand pressure on the naira during this volatile period, though this was eased by ongoing crude oil sales to nearby refineries in naira.

Oil prices have made some recovery this week after taking a dive following President Trump’s global tariff offensive launch. Yet they still have a long way to go to return to where they were just four months ago—and many oil-exporting countries can’t wait for this to happen. The question is, will it?

However, reports suggest that the situation is still dicey for oil producers. The rebound in prices this week came as a result of indications that Trump was willing to consider some tariff exemptions for things like smartphones and semiconductors.

Reuters had earlier reported that countries such as Angola, Colombia, Nigeria, and Venezuela were set to feel some pain from the oil price rout that the tariff offensive triggered. The publication cited analysts as saying the longer the tariff war continued, the worse the pain would get for these oil exporters.