Oil prices continued their downward trend for the third straight day, dropping nearly 3% to their lowest level in three years. This signals a potential decline in local energy prices.
Brent crude, the global benchmark, plummeted to $68.33 on Wednesday, its lowest point since December 2021, according to the Financial Times. Meanwhile, West Texas Intermediate (WTI), the US crude benchmark, fell over 4% to $65.22.
The sharp decline followed a report from the US Energy Information Administration (EIA), which revealed a larger-than-expected increase in US crude oil inventories. The rise in stockpiles has been attributed to President Donald Trump’s aggressive drilling policies, often referred to as the ‘drill baby’ approach.
The recent drop in crude prices also comes amid concerns over an economic slowdown, following Trump’s confirmation of 25% import tariffs on Canada, Mexico, and China. Crude inventories surged by 3.6 million barrels last week, significantly exceeding analyst predictions.
“The key worry for markets right now is Trump’s tariffs, the retaliation from affected countries, and the uncertainty over what happens next,” said Callum Macpherson, head of commodities at Investec. He warned that prices were “at risk of a deeper correction.”
Wednesday’s losses extended declines from earlier in the week after OPEC+, led by Saudi Arabia, unexpectedly announced it would move forward with its previously delayed plan to boost crude production starting in April. This decision means eight key members of the group, including Saudi Arabia and Russia, will collectively increase production by 120,000 barrels per day in April and by 2.2 million barrels per day over the next 18 months.
For oil-producing nations like Nigeria, falling crude prices bring both challenges and opportunities. The country relies heavily on oil revenue, with its 2025 fiscal budget projecting N19.6 trillion in earnings, based on a benchmark crude price of $75 per barrel.
However, on the consumer side, the declining oil prices are expected to drive down local fuel prices. Currently, Premium Motor Spirit (PMS) retails between N860 and N990 per litre, but further reductions could be on the horizon.
