The Central Bank of Nigeria (CBN) announced on Thursday that the country’s earnings from oil exports are expected to contract in 2024. CBN Governor, Olayemi Cardoso, attributed this decline to the oil production limit set at 1.78 million barrels per day in the 2024 budget assumption.
During a presentation at an interactive session with the National Assembly joint committee on Banking, Insurance, and other Financial Institutions, Cardoso revealed that Nigeria’s approved quota by the Organisation of Petroleum Exporting Countries (OPEC) was 1.8 million barrels per day, but the country’s production has consistently fallen below this threshold, according to Dailytrust.
“We expect less revenue from oil exports due to the production limit of 1.78 mbpd in 2024,” Cardoso informed the lawmakers.
In the 2023 budget, the oil production benchmark was established at 1.69 million bpd, but Cardoso noted that Nigeria’s highest level of production reached only about 1.35 mbpd in the third quarter of 2023. He attributed this underperformance to issues such as crude oil theft, pipeline vandalization, production shut-ins, and divestments by major oil companies.
Despite these challenges, Cardoso expressed optimism about the domestic economy’s positive trajectory for 2024. He acknowledged short-term inflation pressures but anticipated a decline in 2024. Additionally, he highlighted the expectation of a significant reduction in exchange rate pressures with the smooth functioning of the foreign exchange market.
Cardoso discussed the unification of exchange rate windows in June 2023, emphasizing its aim to reduce arbitrage, rent-seeking behavior, and speculation in the market. He stated that this policy is geared towards creating a foreign exchange market where demand and supply determine the exchange rate.
In terms of trade, Cardoso reported that total trade in the third quarter of 2023 amounted to N18.804.68 billion, with positive trade balance resulting in an increase in external reserves.
The CBN’s announcement underscores the economic challenges tied to Nigeria’s oil production limits and the importance of diversification efforts in the face of fluctuating oil revenues.