The global oil market experienced heightened volatility in April, driven by escalating trade tensions between the United States and China , which led to a significant drop in crude oil prices. This downturn has further strained Nigeria’s naira , which is already grappling with capital outflows and inflationary pressures.
Although US President Donald Trump’s “liberation day” tariff policy excluded oil, the energy market still reacted negatively. The key issue was China , the world’s largest oil importer, which retaliated against US tariffs, sparking fears of reduced global oil demand.
As a result, the benchmark Brent crude oil price fell by 15.5% month-on-month , closing at $63.12 per barrel —the sharpest monthly decline in over three years.
Impact on Nigeria’s Economy
According to investment firm Afrinvest , the oil market faced significant turbulence in April due to trade frictions between the US and China.
“Despite oil being exempt from tariffs, the market reacted negatively as China engaged in retaliatory trade measures with the US,” Afrinvest stated in its latest report.
The decline in oil prices has added pressure on Nigeria’s economy, which heavily depends on oil exports for foreign exchange earnings. Analysts warn that weaker oil prices could deplete external reserves , limiting the Central Bank of Nigeria’s (CBN) ability to stabilize the naira.
The naira has continued to weaken in both the official and parallel markets , driven by rising dollar demand and declining forex inflows.
Broader Economic Implications
The drop in crude prices threatens to reduce fiscal revenues , weaken investor confidence, and strain Nigeria’s macroeconomic stability.
“The impact of weaker oil prices could significantly affect Nigeria’s macroeconomic position,” Afrinvest noted, calling for urgent measures to mitigate the fallout.
Call for Strategic Interventions
With global economic uncertainties persisting, stakeholders emphasize the need for strategic interventions to protect Nigeria’s oil-dependent economy from external shocks. Diversifying revenue sources, boosting non-oil exports, and strengthening fiscal resilience are critical to ensuring long-term stability.
The sharp decline in global oil prices, exacerbated by US-China trade tensions, highlights Nigeria’s vulnerability to external shocks. Reducing reliance on oil revenues and building macroeconomic buffers are essential to safeguarding the naira and ensuring sustainable growth.
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