Economy at Risk as Nigeria’s Biggest Crude Oil Buyer Turns to Another Country
- Nigeria’s economy may be at risk as one of its top crude oil buyers, Indonesia, plans to increase its crude imports from the US
- The move aims at reducing the proposed 32% tariff slapped against Indonesia by the US
- The plan to reduce Nigeria’s crude purchases is seen as a significant challenge to the country’s 2025 budget
Legit.ng’s Pascal Oparada has reported on tech, energy, stocks, investment and the economy for over a decade.
Nigeria’s export earnings from crude oil may face a significant challenge as Indonesia, one of the country’s key buyers, plans to increase its energy imports from the US.
The shift from Nigeria’s oil exports is part of Indonesia’s larger plans to address its trade imbalance with the US and avoid a 32% trade slapped on its exports.
Source: Getty Images
Indonesia to increase crude purchases from US
According to reports, Indonesia’s Energy minister, Bahli Lahadalia, disclosed that the country has concluded plans to ramp up its crude imports and liquified petroleum gas (LPG) from the US by about $10 billion.
The move aims at negotiating favourable trade terms and circumventing the impact of US tariffs, leading to reduced purchases from Nigeria, its traditional supplier.
The Southeast Asian country’s strategy to eliminate its trade surplus with the US and avoid a potential 32% tariff on its exports includes buying $18 billion to $19 billion worth of US goods.
Lahadalia recommended raising the country’s imports of US LPG and crude oil as part of the broader plan.
Indonesia imported 306,000 barrels from Nigeria
To make these changes possible, Indonesia would reduce its LPG imports from other markets, potentially reducing them by 20 to 30%, depending on existing terms.
Data shows Nigeria earned about $3.8 billion from crude oil and gas exports to the Asian country in 2023.
Kpler’s ship-tracking data shows that Indonesia bought about 306,000 barrels of crude daily in 2024, with Nigeria, Saudi Arabia, and Angola emerging as the top exporters.
However, US imports accounted for about 13,000 barrels of crude daily in the same period.
Crude exports are an essential revenue source for Nigeria, which depends strongly on oil sales to fund its 2025 budget and stabilise the economy.
Nigeria’s economy faces challenges
Already, the budget faces strong challenges with falling crude oil prices in the global market.
In 2023, Nigeria earned N29 trillion from crude exports, representing a 37% increase from the previous year.
Business Insider reports that with Indonesia now seeking to shore up its crude imports from the US, a significant gap could emerge in Nigeria’s revenue stream.
The move may disrupt Nigeria’s key export markets, adding more pressure when oil earnings are crucial.
Source: Getty Images
Nigeria seeks buyers for its crude oil
A recent report by Legit.ng disclosed that Nigeria’s oil faces strong competition from cheaper alternatives from oil-producing countries in Africa.
As of 12 March-loading, crude cargoes remain stranded at sea and unsold, showing the weak demand for the country’s exports.
According to traders, as of March 10, 2025, buyers for the consignments were still being sought.
Nigeria’s crude oil faces competition
The slow sales come as Nigerian crude faces strong competition from Kazakh-origin light sour CPC Blend, US Western Texas Intermediate (WTI) and the Mediterranean sweet crudes in Europe.
Reports say the glut of comparatively priced alternatives has caused a drop in the value of the April loading of Nigerian cargoes, increasing the country’s challenges.
This follows the renegotiation of an extension of a six-month crude supply deal between the Nigerian National Petroleum Company Limited and the Dangote Refinery.
Oil production slumps amid increase in reserves
Legit.ng earlier reported that due to the global crude oil price drop, Nigeria’s daily crude production fell again in March, posing significant threats to the local currency and the national budget.
The Nigerian Upstream Petroleum Regulatory Commission (NUPRC) data indicates that the daily crude output figure reached 1.40 mbpd, from 1.465 in February.
In January, Nigeria’s crude production rose slightly above 1.5 million barrels daily, a quota allocated to the nation by the Organisation of Petroleum Exporting Countries (OPEC).
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Proofreading by Kola Muhammed, copy editor at Legit.ng.
Source: Legit.ng
Pascal Oparada (Business editor) For over a decade, Pascal Oparada has reported on tech, energy, stocks, investment, and the economy. He has worked in many media organizations such as Daily Independent, TheNiche newspaper, and the Nigerian Xpress. He is a 2018 PwC Media Excellence Award winner. Email:pascal.oparada@corp.legit.ng
Kola Muhammed (Copyeditor) Kola Muhammed is an experienced editor and content strategist who has overseen content and public relations strategies for some of the biggest (media) brands in Sub-Saharan Africa. He has over 10 years of experience in writing and (copy)editing.
