Nigeria’s economy is facing a new challenge as global crude oil prices fall by $10 per barrel, adding pressure to an already fragile financial situation.

This drop in oil prices, triggered by U.S. President Donald Trump’s tariffs of at least 10 percent and the possibility of countermeasures, has caused a sharp selloff in oil markets.

On Friday, Brent futures dropped by $10.05, settling at $64.9 per barrel.

S&P Global Commodity Insights analysts noted that the ongoing tariffs and a potential trade war are concerning for the global economy and oil demand, which in turn impacts oil prices.

In addition to these developments, another factor weighing on oil prices is the unexpected decision by OPEC+ to increase production in May.

Eight OPEC+ members agreed to gradually reduce output cuts, adding 411,000 barrels per day to their combined production quotas.

This shift presents a serious problem for Nigeria, whose President Bola Tinubu’s 2025 budget is based on a benchmark oil price of $75 per barrel.

The country had also set an ambitious production target of 2.06 million barrels per day, but this now appears unlikely to be met.

With oil making up about 90 percent of Nigeria’s export earnings and 60 percent of government revenue, a drop in prices directly impacts the country’s ability to fund vital infrastructure projects and social programs.

As a result, the government may find itself under increased pressure to borrow, adding to the country’s mounting debt burden.

The timing of this crisis is particularly troubling as Nigeria is already grappling with high inflation, a weakening naira, and an enormous monthly fuel import bill, now exceeding N1.2 trillion due to the removal of fuel subsidies.

Despite being the largest oil producer in Africa, Nigeria has struggled to increase production, hindered by pipeline vandalism, oil theft, and underinvestment.

According to OPEC data, the country has consistently fallen short of its 1.8 million barrels per day production target, with recent output hovering around 1.47 million barrels per day.

For Nigeria, the situation is a double blow: the country is not only selling its oil for less, but it is also producing less.

This creates an even greater strain on an economy that heavily depends on oil for foreign exchange earnings and government revenue.