Trump’s energy policy: FG’s N19.6trn revenue target under threat

AS Nigeria steps up efforts to implement its N54.9 trillion 2025 budget, experts have expressed fears that President Donald Trump’s energy policy, targeted at increasing oil output would impact the $75 per barrel target on which the budget is based, inflation and Diaspora remittances, among others.

With his ”Drill Baby Drill” energy policy, President Trump said America would invest in fossil energy resources, boost oil and gas output in order to meet its domestic needs, a development analysts said could lead to oversupply and low prices in the international market. Reacting, the director/CEO, Centre for the Promotion of Private Enterprise, CPPE, Dr. Muda Yusuf, said President Trump’s policy would hinder the realization of Nigeria’s $75 per barrel 2025 budget target, escalate high inflation, while stalling Diaspora remittances.

He said: “USA has been the largest oil producer globally for the past six years, noting that in 2023, it produced an average of 21.91 million barrels per day, which is about 22% of the global oil production. “The USA is positioned to influence global oil output and prices, especially the Trump administration has committed to increasing oil output to reduce energy prices in the USA and globally.

“The country also has the global diplomatic clout to influence the Organisation of Petroleum Exporting Countries, OPEC, oil output as President Trump has already signed an Executive Order creating a National Energy Dominance Council to drive the country’s energy dominance agenda. “The Trump administration is committed to moderating the current global geopolitical tension, especially the Russian-Ukraine war, and possibly the Israeli Hamas war. “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.”

Crude oil price benchmark of $75 per barrel under threat He said: “In light of these, the scenario of a weakening of crude oil prices in the near term is therefore very high. 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. “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 and depress 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.”

On implications, he said: “The Trump administration has demonstrated an unequivocal commitment to the ideology of economic nationalism, protectionism, deglobalization, unilateralism and reciprocity. and fragmentation of the global economy. This has unleashed a flurry of retaliatory trade policy actions from a number of countries across a wide range of product groups, even by the close allies of the United States. “Given the current trade policy disposition of the Trump Administration, AGOA faces the prospect of being terminated, although Nigeria has very little to show for the opportunities offered by the African Growth and Opportunity Act, AGOA.

“Meanwhile, the tariff war offers some opportunities for export and investment for Nigeria taking advantage of the gaps that the trade war may create in the countries involved, to the extent that Nigeria is not a victim of the tariff actions.”

High inflation, others coming