For the third day in a row, oil prices dropped, plunging about 3% to their lowest point in three years, indicating that local energy prices will continue to decline.
The Financial Times reports that Brent crude, the global benchmark, dropped as low as $68.33 on Wednesday, the lowest level since December 2021.
Likewise, the US crude blend, West Texas Intermediate, fell more than 4% to $65.22.
Following the US Energy Information Administration’s revelation of a higher-than-expected increase in U.S. crude oil stocks due to President Donald Trump’s “drill baby” policy, the actions were taken.
The three-day decline in petroleum prices coincides with the anticipated slowdown in economic activity following Trump’s confirmation of the imposition of 25% import duties on Canada, Mexico, and China.
Over the preceding week, crude stockpiles increased by 3.6 million barrels, significantly more than analysts had predicted.
The most recent in a string of unfavorable demand signs was the EIA report.
According to Callum Macpherson, head of commodities at Investec, “Trump’s tariffs, the retaliation from affected countries, and what will happen next are the main worries for markets at the moment.” The price was “at risk of a deeper correction,” he continued.
Wednesday’s decline increased losses since Monday, when Saudi Arabia-led OPEC+ shocked the market by announcing it will move on with a postponed plan to increase crude production beginning in April by lifting long-standing production cuts. Due to the cartel’s decision, eight producers—including Saudi Arabia and Russia—will boost their output by a total of 120,000 barrels per day in April and 2.2 million barrels per day over the following 18 months.
Reducing crude oil has both positive and negative effects on nations that produce it, such as Nigeria.
Nigeria’s revenue is mostly reliant on the sale of crude oil; the country is expected to earn N19.6 trillion in the fiscal year 2025, with a benchmark crude price of $75 per barrel.
Local Premium Motor Spirit retail prices, which range from N860 to N990 per litre, will also continue to decline as a result of the declining price of crude oil.