In a historic move, Nigeria, Africa's largest oil producer, has taken a game-changing decision—no longer selling its crude oil in US dollars. The Federal Executive Council (FEC) announced that the country will now sell its crude in naira, signaling a major shift in its economic strategy. For decades, Nigeria’s oil revenues have been tied to foreign currencies, especially the dollar, but that’s all about to change.
According to Mohammed Manga, a spokesperson for the Ministry of Finance, this decision is part of a broader plan to boost the stability and growth of Nigeria's economy. With approximately 37 billion barrels of oil in reserve—3.1% of the global total—Nigeria’s new strategy aligns with the current global geopolitical landscape, including tensions in the Middle East and the ongoing Russia-Ukraine conflict. This pivot could offer the country a chance to strengthen its economy while navigating an unpredictable global market.
Rising Oil Prices Amid Geopolitical Turmoil 🌍
As the conflict between Iran and Israel heats up, global oil prices are surging. Nigeria’s Bonny Light crude has risen from $73 to $78 per barrel, while the international benchmark, Brent crude, has jumped by over 10%, now sitting at $79 per barrel. With Iran, a major oil producer, involved in missile attacks on Israel, these rising prices are no surprise.
This comes as good news for Nigeria’s 2024 budget, which was set with a $78 per barrel benchmark. If production meets its targets, the country could narrow its budget deficit. Economist Dr. Abdulsalam Muhammad Kani points out that sustained high oil prices and stable production could help Nigeria ease its debt burden and fund essential public projects. Moreover, the boost in dollar revenue from oil exports might strengthen the naira and reduce the pressure on foreign exchange, lowering import costs—a critical factor for a country heavily dependent on imported goods.
Challenges Ahead: Corruption and Oil Theft Threaten Gains ⚠️
Despite these optimistic prospects, Nigeria faces internal hurdles that could undermine its oil profits. Corruption and large-scale oil theft continue to plague the industry. According to energy expert Engr. Sani Yabagi, much of Nigeria’s oil is being siphoned off by influential individuals, drastically reducing the nation’s earnings. In just one week, from August 24 to 30, the Nigerian National Petroleum Corporation (NNPC) reported 188 cases of oil theft in the Niger Delta region alone—a staggering number that highlights the gravity of the issue.
Compounding the problem is Nigeria’s reliance on imported refined petroleum products. While the country has recently made strides with the launch of the Dangote Refinery, refining oil locally is still in its infancy, and its impact on revenue is limited. The government’s recent move to sell crude oil in naira to local refineries, including Dangote, is a step in the right direction, but Yabagi warns that this alone won’t be enough to lower fuel costs unless crude is sold to these refineries at reduced prices.
As energy prices continue to soar due to the ongoing Middle East crisis, Nigeria stands at a crossroads. Without addressing the deep-rooted issues of oil theft and improving domestic refining capabilities, the country may not fully reap the benefits of this new economic strategy. While short-term gains are likely, long-term success depends on sound management and decisive action.
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In a historic move, Nigeria, Africa’s largest oil producer, has decided to stop selling its crude oil in US dollars. The Federal Executive Council (FEC) announced that crude oil sales will now be conducted in naira, marking a major shift in the country’s economic strategy. This change comes after decades of relying on foreign currencies, especially the dollar, for oil revenue.

According to the Ministry of Finance, this decision is part of a broader plan to strengthen Nigeria’s economy. With around 37 billion barrels of oil reserves, Nigeria’s strategy aligns with current global events like tensions in the Middle East and the ongoing Russia-Ukraine conflict. This shift could help the country bolster its economy while navigating a volatile global market.

Rising Oil Prices Amid Global Turmoil 🌍

As tensions between Iran and Israel escalate, global oil prices are surging. Nigeria’s Bonny Light crude has risen from $73 to $78 per barrel, while Brent crude, the global benchmark, has jumped by more than 10% to $79 per barrel. With Iran involved in missile attacks on Israel, rising prices are no surprise. For Nigeria, this could bring relief to its 2024 budget, which was set at a $78 per barrel benchmark. If production stays on track, Nigeria may be able to reduce its budget deficit and fund essential public projects, potentially easing its debt burden.

Challenges Ahead: Corruption and Oil Theft ⚠️

Despite these positive signs, Nigeria faces internal challenges that could threaten its oil profits. Corruption and large-scale oil theft remain significant issues. The Nigerian National Petroleum Corporation (NNPC) recently reported 188 cases of oil theft in just one week in the Niger Delta. This ongoing issue drastically reduces the country’s earnings.

Additionally, Nigeria still relies heavily on imported refined petroleum products. Although the Dangote Refinery is a positive step toward refining oil locally, its full impact on revenue is yet to be seen. Selling crude oil in naira to local refineries is a good start, but energy experts warn that fuel costs may not drop unless crude is sold to these refineries at reduced prices.

As global energy prices soar, Nigeria stands at a crucial juncture. Addressing corruption and improving domestic refining will be key to fully benefiting from this new economic strategy. While short-term gains are possible, long-term success will depend on effective management and decisive action.