Nigeria Grapples with plummeting oil revenues as surplus shrinks to $6 per barrel

Fast forward to 2023, with an oil price benchmark of $75, the surplus has dramatically contracted to $6, with the average price per barrel standing at $81.22 for the year so far

Lagos, Nigeria: As the international oil market faces unprecedented challenges driven by global events, Nigeria finds itself grappling with a significant downturn in oil revenues, marked by a substantial drop in the surplus earned per barrel of crude oil exported.

A comprehensive analysis by THISDAY reveals that, while Nigeria enjoyed a robust surplus of $30 in 2022, the surplus has dwindled to a mere $6 in 2023.


In 2022, Nigeria’s oil price benchmark was set at $73, but the actual average price per barrel soared to $103.87, resulting in a surplus of approximately $30.

Fast forward to 2023, with an oil price benchmark of $75, the surplus has dramatically contracted to $6, with the average price per barrel standing at $81.22 for the year so far.

This stark decline in surplus revenue poses a substantial challenge for Nigeria, a country heavily reliant on oil revenues to sustain its economy.

The situation is further compounded by the nation’s struggle to meet production targets, with oil production in 2023 falling short of projections.

Nigeria operates the Excess Crude Account (ECA), a fiscal buffer designed to stabilize the economy by saving revenues exceeding the budgetary benchmark generated from oil sales.

However, the effectiveness of the ECA has been marred by controversy, corruption allegations, and uncertain performance, as revealed by the National Economic Council (NEC), which reported a significant drop in the account balance from $2.1 billion to $473k as of August 2023.


The challenges extend beyond dwindling surplus revenues, encompassing a lower-than-expected oil production volume and significant currency devaluation.

The exchange rate, projected at N435.57 in the 2023 budget, plummeted to N601.02 per dollar due to the massive devaluation of the naira, adding an additional layer of complexity to Nigeria’s economic woes.

The proposed 2024 budget details indicate that the nation faces increasing fiscal risks, with weaker-than-expected domestic economic performance and structural issues posing significant hurdles.

Revenue generation remains a critical constraint to Nigeria’s fiscal viability, and the government acknowledges the need for strategic measures to navigate the evolving economic landscape.

While oil revenues witness a decline, there is a silver lining in the form of non-oil revenue outperforming budget expectations, boasting a 108.9% performance in 2022.

However, this positive trend may not be sufficient to offset the impact of diminishing oil revenues on the overall economic health of the nation.

As Nigeria grapples with the double jeopardy of falling oil prices and the challenge of meeting OPEC production quotas and benchmark oil prices simultaneously, the duration of the current oil price downturn remains uncertain.

The global oil market, highly sensitive to geopolitical events and economic fluctuations, continues to react to the ongoing COVID-19 pandemic, the Russian-Ukraine war, and production challenges in African countries.

In the face of these challenges, the Nigerian government acknowledges the need for a resilient and adaptive fiscal strategy.

The nation’s ability to weather this storm will hinge on strategic decision-making, effective policy implementation, and a proactive approach to addressing the multifaceted issues impacting its economic landscape.


This article was created using automation technology and was thoroughly edited and fact-checked by one of our editorial staff members

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