KEY POINTS
- Lowering U.S. oil imports could also crimp Nigeria’s oil revenue under Trump.
- Nigeria is urged to expand refining capacity and diversify its economy.
- It has also made agreements with Dangote Refinery and NNPC aimed at ensuring constant supply of fuel.
President Donald Trump’s incoming energy policies including an executive order and declaration of a national energy emergency to boost U.S. oil and gas production will affect Nigeria’s oil exports and revenue generation.
Oil prices to Nigeria, its export and the world
The price of crude oil, including Nigeria’s Bonny Light, fell to $80 per barrel from $83, as markets await clarity on Trump’s policy agenda ahead of his inauguration.
These policies can risk cutting America’s appetite for Nigerian oil, which could spell bad news for revenue, warn by experts.
Imports of Nigerian oil to the U.S. have shrunk in recent years from domestic shale production and policy changes, but data shows that such imports totaled $4.73 billion in 2023. But the new proposed policies could further cut that process in 2025 and beyond.
Economic implications
Experts have shared mixed opinions on the implications of the U.S. energy strategy for Nigeria:
Dr. Muda Yusuf, CEO of the Centre for the Promotion of Private Enterprise (CPPE):
And Yusuf said that higher U.S. investments in oil and gas production would likely push global supply higher and send crude down.
Reduced oil prices will not be good for Nigeria but could be good for business by dropping the cost of petroleum products including petrol, diesel and jet fuel.
Yusuf also mentioned the possible effect Trump’s promise to draw back from Russia-Ukraine conflict will have. Lifting sanctions on Russia could increase supply of oil in the world and the price of oil will also be affected negatively, affecting Nigeria’s earnings, he added.
Dr. Bala Zakka, energy analyst:
Zakka also insisted that Nigeria needed to invest in refining capacity. To add value to the local economy, he suggested, the country should reduce crude oil exports in favour of local refining, as it would reduce the over reliance on oil exports.
Adaptation at the time of domestic solutions and industry
Nigeria should recognise that in the age of their increasing dependence on the crude oil it exports through most of their economy, they must review their policies to reduce export dependence and not shy away from investing in domestic refining and all other aspects of their economy, the National President of the Oil and Gas Service Providers Association of Nigeria (OGSPAN), Engr. Victor Chukwuma alleged.
Reacting to plans by Oil marketers in cahoots with politicians to up prices of petrol during the festive season, PETROAN agreed with NNPC Limited owned Port Harcourt refinery and Dangote Refinery to ensure steady petrol supply. Mobilizing these efforts helps avoid shortages for her, according to PETROAN’s National Public Relations Officer, Dr. Joseph Obele.
Besides, the association stressed how the Dangote Refinery’s 650,000 barrels per day capacity will help stabilize fuel supply and reduce the importation of refined products in Nigeria.
