Nigeria: Naira, crude oil prices record gains, spark economic hope
The Naira, which has experienced considerable volatility in recent months, firmed up against the US dollar in the parallel market. On Saturday, Bureau De Change (BDC) operators in Lagos reported that the local currency was being sold at N1,610 per dollar, up from N1,620 on Friday. The buying rate stood at N1,595, indicating an N10 gain within 24 hours. Operators attributed the improvement to increased demand for the Naira, as Nigerians prepared for the Easter festivities. The official exchange rate, which closed for the holiday weekend on Thursday, stood at N1,599.93 per dollar.
On the global stage, crude oil markets have also staged a recovery, with prices climbing steadily throughout the week. Brent crude, the international benchmark, surged by 7 percent to reach approximately $68 per barrel—driven by a combination of OPEC+ production cuts, fresh U.S. sanctions on Iran, and encouraging macroeconomic data. Nigeria's Bonny Light crude followed suit, posting a 1.95 percent weekly gain and closing at $68.60 per barrel.
The upward trend in oil prices has been underpinned by shifting geopolitical dynamics. A major catalyst was the U.S. government's announcement of new sanctions targeting Chinese firms involved in the purchase of Iranian crude, a move that is expected to tighten global supply chains and introduce fresh uncertainty in oil markets. Simultaneously, optimism surrounding potential trade agreements between the United States and the European Union added further momentum to the price rally.
Adding to the bullish sentiment, the International Energy Agency (IEA) released its monthly oil market report, revising global supply growth forecasts downward. The IEA now expects global oil supply to grow by 1.2 million barrels per day (bpd) in 2025, a reduction of 260,000 bpd from its previous projection. The cutback is largely attributed to weaker-than-expected output from major producers such as the United States and Venezuela.
During Thursday's trading session, oil prices continued their upward trajectory. Brent crude futures gained $2.11, or 3.2 percent, closing at $67.96 per barrel. Similarly, U.S. West Texas Intermediate (WTI) futures appreciated by $2.21, or 3.54 percent, settling at $64.68 per barrel. Analysts noted that these gains were partially supported by heightened expectations for a trade pact between the U.S. and the EU, as well as ongoing geopolitical tensions in the Middle East.
Despite the favorable trends in the oil and forex markets, Nigeria's external reserves continued to slide.
As of Wednesday, the country's gross foreign exchange reserves had declined by 0.29percent on a week-on-week basis, standing at $37.89 billion. The persistent drawdown reflects the impact of sluggish FX inflows, which have constrained the Central Bank of Nigeria's ability to replenish its reserves and manage currency volatility effectively.
Still, the recent developments have sparked cautious optimism. With improved oil revenues and a firmer Naira, there is growing hope that inflationary pressures—particularly on food and transport—could ease in the coming weeks. As Nigerians celebrate Easter, the economic momentum offers a much-needed respite and a potential springboard for greater stability in the months ahead.
Copyright © 2022 Nigerian Tribune Provided by SyndiGate Media Inc. (Syndigate.info).
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