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ANALYSIS: For Nigeria, rising oil prices make little difference

Despite oil price rally, the Nigerian government is not reaping much from its crude sales as the nation continues to buy refined crude at high prices due to the moribund state of domestic refineries.

Since oil price surged in recent months, analysts and Nigerian policy makers have received the news with mixed feelings and uncertainty.

Earlier in October, President Muhammadu Buhari presented the 2022 budget estimate to a joint session of the National Assembly.

President Buhari presents 2022 Draft Appropriation Bill to the National Assembly today, 7th October 2021

The budget anticipates an exchange rate of N410.15 per dollar, a GDP growth rate of 4.2 per cent, and a 13 per cent inflation rate.

The president said the total federally distributable revenue is estimated at N12.72 trillion in 2022 while total revenue available to fund the 2022 budget is estimated at N10.13 trillion. This includes grants and aid of N63.4 billion, as well as the revenues of 63 Government-Owned Enterprises (GOEs).

Meanwhile, the proposed total expenditure for the year was put at N16.39 trillion with a crude oil benchmark price of $57 per barrel and daily oil production estimate of 1.88 million barrels (inclusive of condensates of 300,000 to 400,000 barrels per day).

Ordinarily, the surge in oil prices should help provide buffer for the government in the fiscal year. But in reality, the difference may not be very significant considering Nigeria’s oil consumption.


On September 28, Brent crude climbed 0.86 per cent to $80.22 a barrel, representing the highest surge since the last quarter of 2018. The global oil benchmark climbed a three-year high amid increasing demand for the commodity across the globe.

The prices climbed to multi-year highs shortly after a group of some of the world’s most powerful oil producers opted against a big supply boost, prompting analysts to conclude that crude prices could be poised to rally toward $100 a barrel.

In the first week of October, the Organisation of Petroleum Exporting Countries and non-OPEC partners, a group collectively referred to as OPEC+, said it would stick to its existing pact for a gradual increase in oil supply.


At the time, the international benchmark Brent crude futures had climbed to $81.74 a barrel, up more than 0.5 per cent for the session, while US West Texas Intermedfiate stood at $77.92, or roughly 0.4% higher.

Earlier in July, OPEC+ had agreed to raise output by 400,000 barrels a month until at…

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ANALYSIS: For Nigeria, rising oil prices make little difference

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