Market News

…Experts push for stable output, clearer policies

By Chinwendu Obienyi

>span class="s2"> naira traded steadily in the parallel foreign exchange market on Tuesday, exchanging at approximately between N1,608-N1,610 to the US dollar, as global oil markets rallied on the back of tightening supply and persistent geopolitical concerns.

This steadiness comes as Brent crude prices have experienced a sharp decline-falling more than 15 per cent month-on-month and over 20 per cent since April largely due to concerns about global economic growth and expectations that oil supply will outpace demand.

However, specifically at about 2:20 pm, Brent crude oil, Nigeria’s benchmark export, rose to $61.97 per barrel, gaining about +2.89 per cent.

While these moves have reduced arbitrage opportunities, analysts caution that FX liquidity remains inadequate to meet genuine demand.

Industry data from the Nigerian Upstream Petroleum Regulatory Commission (NUPRC) indicates that crude oil production rose marginally in April, reaching an estimated 1.4 million barrels per day, excluding condensates. While still below Nigeria’s OPEC allocation of 1.74 million bpd, the marginal uptick provides scope for increased revenue generation if maintained.

Hence, economic experts are calling for urgent stabilization of oil output and more coherent, coordinated policy measures to ensure long-term currency and economic stability.

Nigeria’s ability to meet its oil production targets, which is critical for foreign exchange earnings, depends on resolving security and political challenges, especially in key oil-producing regions like Rivers State.

Founder, Cowry Asset Management Limited, Johnson Chukwu, stressed that the improved price environment creates short-term headroom for fiscal planners. Chwukwu, however, noted that the benefits would materialize only if the FG improves on its production volumes.

“The benefits will only materialize if production volumes rise consistently and if leakages including oil theft and refined product subsidies are curtailed”, he explained.

Head of Research at BlueEdge Capital, Amaka Okafor, noted that while sustained strength in oil prices offers welcome relief, Nigeria must address deeper vulnerabilities in its macroeconomic framework to stabilise the naira in the medium term.

Even with $90 per barrel, the exchange rate may not find equilibrium unless structural issues are addressed. We need productivity growth, credible FX management, and fiscal discipline, not just oil windfalls”, Okafor said.