Lower oil prices, occasioned by the tariff war launched by US President, Donald Trump, may result in another round of naira devaluation as Nigeria’s 2025 budget comes under immense pressure, Gold man Sachs has said.
Bloomberg reported Goldman Sachs Group Inc. Economist, Andrew Matheny, as saying during an interview that Nigeria’s natural policy response to lower oil prices is a depreciation of the local currency.
Matheny noted that the oil production assumption in Nigeria’s 2025 budget was optimistic given that 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. While the Federal Government had projected an oil production of two million barrels of crude oil per day, Nigeria’s crude oil production output was about 1.4 million barrels per day in March 2025.
The news agency quoted Matteny, as saying: “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.”
Crude oil exports have for decades accounted for over 85 per cent of Nigeria’s foreign exchange earnings. The naira has weakened about five per cent against the dollar so far this month, with the local currency trading at N1,620 per dollar on Wednesday at the parallel market.
