Yemisi Izuora
The Centre For The Promotion Of Private Enterprise (CPPE) has drawn the attention of Nigerian Government to unfolding global politics with crude oil at the center of power play which will likely result to exponential revenue loss to the Country.
Chief Executive Officer (CEO) of the Centre and an economist, Dr. Muda Yusuf called for a concerted response to the impending crisis through economic diversification to sustain growth and development.
Yusuf recalled that the inception of the Trump administration in the United States of America has remarkably changed the dynamics of global trade, global economic outlook and geopolitical trajectory.
The US economy he said is also experiencing a record disruption in its economic, trade and political governance systems and these developments have multi-dimensional implications for the Nigerian economy.
“There are immediate and remote consequences for energy prices, trade relations, economic diplomacy, macroeconomic stability, donor funding and capital flows. These are evolving outcomes of the Trump presidency which would impact the outlook for Nigerian economy in the near term.” Yusuf said.
He also informed that the United States has been the largest oil producer globally for the past six years.
Citing example he said, “In 2023, for instance, the USA produced an average of 21.91 million barrels per day, which is about 22 per cent of the global oil production. The USA is, therefore, in a good position to influence global oil output and prices.”
The Trump administration has committed to increasing oil output to reduce energy prices in the USA and globally and country also has the global diplomatic clout to get OPEC to boost oil production.
To this end, the President Trump has signed an Executive Order creating a National Energy Dominance Council to drive the country’s energy dominance agenda.
Additionally, the Trump administration is committed to moderating the current global geopolitical tension, especially the Russian-Ukraine war, and possibly the Israeli Hamas war.
Yusuf, warned that if Trump succeeds in ending the war, especially the Russian-Ukraine war, the prospects for growth in global oil output would be considerably heightened as Russia supplies about 10 mbd of oil to the global oil market. There is also a good chance that the current sanctions on Russia by the USA may be lifted thereafter as the relationship between the two countries normalizes.
In light of these, Yusuf warned that the scenario of a weakening of crude oil prices in the near term is therefore very high and in this context, the crude oil price benchmark of $75 per barrel in the 2025 budget may not hold.
This would impact the outlook for government revenue and foreign exchange earnings in 2025.
He went on to say that the decision of President Trump to opt out of the Climate change agreement[the Paris Accord] also has far reaching consequences for the global oil market.
This signals less commitment to climate change concerns and the acceleration of more investment in fossil fuels by the USA.
Additionally, the sweeping imposition of trade tariffs on major US trading partners may weaken the global economic growth outlook, dampen global oil demand anddepress oil prices.
However, the upside is that energy prices would drop globally – the price of diesel, PMS Jet fuel, gas etc. This would gladden the hearts of many economic players in the country. The transmission effect would be very fast because of the deregulated regime of the oil and gas sector.