Trump’s energy policies threaten Nigeria’s oil revenue — CPPE

The Chief Executive Officer, Centre for the Promotion of Private Enterprise, Dr Muda Yusuf, has warned that the renewed push for increased oil production under United States President Donald Trump’s energy policies could have severe consequences for Nigeria’s economy, warning that falling global crude prices may significantly weaken government revenues.

Trump’s pro-oil agenda, which includes ramping up domestic fossil fuel production and reversing green energy policies, is expected to intensify global competition and drive down oil prices. For Nigeria, where oil exports account for over 85 per cent of export earnings and 30 per cent of government revenue, the ripple effects could be severe.

Speaking with The PUNCH in an exclusive interview, Yusuf cautioned that an increase in U.S. crude supply could flood the market, depressing prices and putting Nigeria’s revenue under significant strain.

“If global crude prices fall, Nigeria’s earnings will take a hit. That means pressure on our reserves, foreign exchange earnings, and exchange rate,” Yusuf warned.

The Federal Government has proposed a N47.9tn budget for 2025, relying on oil revenues to generate N19.60tn (56 per cent) of the total. However, persistent production challenges—including infrastructure deficits, oil theft, and OPEC+ quota restrictions—raise concerns about meeting revenue targets.

Despite these risks, Yusuf pointed out that Nigeria could offset some losses if it improves production capacity.

“If we can significantly improve our oil production, at least meet the OPEC quota, then we may, to some extent, compensate for this loss in price with an increase in production,” he stated.

The CPPE boss has long warned about Nigeria’s vulnerability to oil price fluctuations, especially given the country’s failure to fully diversify its economy. Previous shortfalls in crude production have worsened fiscal imbalances, with production targets consistently missed. In 2013, Nigeria aimed for 2.5 million barrels per day (bpd) but only achieved between 2.1 and 2.2 million bpd, a shortfall of about 300,000 bpd.

However, Yusuf stated that lower oil prices could provide a silver lining for Nigerian businesses and consumers, as a drop in crude prices is expected to reduce the costs of petroleum products such as petrol and diesel.

“Energy costs have been a major challenge for businesses in Nigeria. If global prices drop, we will see immediate reductions in the cost of fuel and other energy products, which is a big positive for businesses,” Yusuf explained.

He added, “With the Nigerian petroleum sector now deregulated, the effects of a drop in crude prices could be felt swiftly. A decline in international crude oil prices typically leads to lower local pump prices for fuel, aviation fuel, and diesel, easing cost burdens on transporters and manufacturers.”

Yusuf also explained that geopolitical factors could further impact oil prices, noting that Trump’s stance on the Russia-Ukraine war could influence global supply.

“If Trump ends the war and lifts sanctions, Russia will flood the market with oil and gas, further reducing prices,” he said.

Yusuf emphasised that the potential increase in oil supply from both the U.S. and Russia would intensify price competition, further straining Nigeria’s already fragile oil revenue streams. While cheaper fuel prices could offer relief to industries, the trade-off for government revenues could be steep, especially at a time when Nigeria is struggling with rising debt and a foreign exchange crisis.

“It is good and bad at the same time. With the Nigerian government banking on oil revenues to sustain its budget,” he noted.

Yusuf emphasised the urgency of economic diversification in sectors like agriculture, technology, and renewable energy, which are seen as critical in reducing the nation’s reliance on oil and mitigating external market shocks.

“As global oil dynamics shift under Trump’s policies, Nigeria faces a crucial choice: either double down on crude production in hopes of offsetting price drops or accelerate structural economic reforms to insulate itself from oil market volatility,” the CPPE boss added.