In 2025, Nigeria�s economy faces significant headwinds as escalating global trade tensions, particularly between the United States and China, coupled with protectionist policies, have led to a sharp decline in crude oil prices and a weakening of the naira. These developments threaten the nation�s fiscal stability, foreign exchange reserves, and broader economic outlook.
The imposition of new tariffs by the U.S. administration has intensified trade conflicts, contributing to a downturn in global economic activity and a consequent decrease in demand for crude oil. Brent crude futures have fallen to approximately $65.42 per barrel, while U.S. West Texas Intermediate stands at $61.65 per barrel . Barclays has revised its 2025 Brent crude forecast down by $4 to $70 per barrel, citing an anticipated supply surplus and ongoing trade tensions .
The decline in oil prices has directly impacted Nigeria�s foreign exchange earnings, given that crude oil exports account for about 90% of the nation�s forex inflows. The naira has depreciated significantly, with reports indicating a drop to record lows in both official and parallel markets . In response, the Central Bank of Nigeria (CBN) has intervened by selling nearly $200 million to support the currency .
The weakening naira exacerbates inflationary pressures, increasing the cost of imported goods and eroding purchasing power. This situation is further complicated by rising money supply and declining oil production, which fell short of OPEC quotas in recent months .
Nigeria�s 2025 budget, predicated on a $75 per barrel oil benchmark, is under threat due to the current lower oil prices. The government is considering a budget review to address the growing deficit and ensure fiscal sustainability . Analysts warn that if current trends persist, Nigeria could face significant revenue shortfalls, potentially losing up to N19.6 trillion in oil revenue .
The broader economic outlook remains uncertain, with potential for further currency devaluation and economic contraction if global trade tensions continue unabated. Experts emphasize the need for Nigeria to diversify its economy, enhance non-oil exports, and implement structural reforms to mitigate the impact of external shocks .
The confluence of global trade disputes and declining oil prices presents a formidable challenge for Nigeria�s economy. Addressing these issues requires a multifaceted approach, including prudent fiscal management, economic diversification, and proactive engagement in international trade negotiations to safeguard the nation�s economic interests.
