Global oil markets faced renewed turbulence in April as heightened trade tensions—particularly between the United States and China—sparked a sharp drop in crude oil prices. Despite oil being exempt from U.S. President Donald Trump’s “liberation day” tariff policy, investors reacted strongly to fears of slowing global demand, especially from China, the world’s top oil importer. Brent crude tumbled by 15.5% month-on-month to $63.12 per barrel, the steepest monthly fall in over three years, according to a report by Afrinvest.
This steep decline in oil prices has dealt a blow to Nigeria’s economy, which relies heavily on oil for foreign exchange earnings. The naira, already under pressure from inflation and capital outflows, came under additional strain as falling oil revenues weakened the country’s external position. Analysts from Afrinvest noted that the volatility in oil prices poses serious risks to Nigeria’s macroeconomic stability, especially if the trend persists.
With declining crude prices threatening to erode Nigeria’s external reserves, experts warn the Central Bank of Nigeria may face growing difficulty in defending the naira. The weakening currency could have ripple effects on fiscal revenues, investor sentiment, and overall economic growth. Concerns are mounting that prolonged trade frictions between the world’s largest economies could further destabilize oil-dependent nations like Nigeria.
On both official and parallel markets, the naira has struggled to find footing amid increased dollar demand and lower forex inflows. As global economic uncertainty continues, stakeholders are urging proactive policy responses to cushion the country from external shocks. Strategic measures are seen as critical to safeguarding Nigeria’s economic outlook and ensuring resilience in the face of global disruptions.
Source: Punch