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‘Drill,baby, drill’: Naira faces uncertainty over Trump’s plan to pump more oil

THE naira is facing an uncertainty over the United States President Donald Trump’s plan to pump more gas and Shale oil and push them to the world in a phrase now known as “drill, baby, drill.”

The move may scupper positive projections on the naira made earlier by financial experts. Mr Trump plans to implement some of his fossil fuels policies, which will lead to petrol glut and reduce Nigeria’s foreign exchnage earnings.

“America will be a manufacturing nation once again, and we have something that no other manufacturing nation will ever have, the largest amount of oil and gas of any country on Earth, and we are going to use it. We will drill, baby, drill,” Mr Trump said in his inauguration speech at the US Capitol on Monday.

The US President plans to “fill the American strategic reserves up again, right to the top” and export energy all over the world. He announced the establsihment of the national energy emergency on Monday, quitting the Paris climate change agreement that is focused on tackling rising temperatures.

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Trump predecessor, Mr Joe Biden, had sold 180 million barrels of crude oil from the US Strategic Petroleum Reserve (SPR), helping to keep oil prices stable in the wake of Russia’s invasion of Ukraine. Mr Biden’s moves led to the depletion of the strategic reserves, which fell to its lowest level in 40 years. But Mr Trump will have none of that.

How does that affect naira?

Mr Trump, the 47th President of the United States, plans to hit at the heart of Nigeria’s revenue – though he is only interested in pro-American policies and strengthening the dollar.

Nigeria relies on oil for over 50 percent of its revenues, and by pumping more oil, Mr Trump may create an oil glut and crash prices.

“With lower oil prices, Nigeria’s foreign exchange earnings will fall, leading to more acute dollar shortages. This will weaken the naira and, perhaps, force the Central Bank of Nigeria (CBN) to dip its hand in the foreign reserves to support it. This is just the classical case, and I hope that does not happen,” said a Lagos-based development economist, Dr Onwe Ndinabo.

Mr Trump’s usual stronger dollar policy will weaken the naira and make imported good more expensive for Nigeria.

READ ALSO: Here are seven weakest currencies in the world in 2025 – Naira is not among them

BusinessDay quoted Samuel Sule, Chief Executive Officer of Renaissance Capital Africa, as saying that the Trump-led administration would be “supportive of oil industry expansion and less focused on climate mitigation.” 

“As such, a potential increase in oil supply resulting from policy changes could lead to lower prices which has an impact on oil producers such as Nigeria,” he was quoted as saying. 

Trump’s previous presidency

Forbes gave a picture of what a Trump oil production will likely look like. “The largest increase in oil production during any presidential term took place under President Trump (2.47 million BPD). The largest decline — nearly a million BPD — took place under President George Bush, Sr,” it said.

“During Trump’s last month in office, production had recovered to 11.1 million BPD, which was still 2.2 million BPD higher than during his inauguration month.”

Nigeria’s realities

Nigeria faces uncertain realities. Nigerian Upstream Petroleum Regulatory Commission (NUPRC) said crude oil production, including condensates, averaged 1.55 million barrels per day (bpd), marking a 5.44 percent year-on-year (YoY) increase from the 1.47 mbpd recorded in 2023. Nigeria targets 2.06 million per day oil production in the 2025 budget – which is considered almost an impssibility.

“Even the $75 per barrel and N1,400/$ is just ultra-optimistic and may not happen. I am not sure we can do more than 1.5 million bpd because the issues are still there: theft, lack of investments, exit of multinationals,” said an oil and gas analyst, Mr Onyeka Iloka.

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Nigeria has failed to meet its oil production targets for years due to years of underinvestment, theft and the government’s inability to fully implement the Petroleum Industry Act (PIA).

Nigeria fell short of its revenue target by nearly 30 percent in the second quarter (Q2) of 2024, pushing the budget deficit from N3.88 trillion to N4.5 trillion, FIJ reported.

The nation’s public debt burden hit N134.3 trillion, rising by N12.6 trillion in three months to June 2024, according to the most recent data published by the Debt Management Office (DMO).

Nigeria’s inflation stood at 34.80 percent in December 2024 from 28.92 percent in December 2023. High prices erode people’s purchasing power and ridicules the naira’s value, say analysts.

“Nigeria’s economy relies heavily on oil exports, and Trump’s pledge to flood the global market with American oil seriously threatens the country’s financial stability,” SBM Inteligence said in its recent report.

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