The Centre for the Promotion of Private Enterprise has explained the implications of United States President, Donald Trump’s administration on the price of Premium Motor Spirit and Nigeria’s economy.
The Chief Executive Officer of CPPE, Dr. Muda Yusuf, in an exclusive interview with DAILY POST on Tuesday, said that Trump’s sweeping policy on the restart of oil drilling in the US and drive for investment would impact global oil supply, which would impact Nigeria’s crude revenue and the Naira.
Recall that upon the inauguration of Trump on Monday as the 47th President of the US, he announced that the country would restart oil drilling to reduce energy prices.
Trump announced the US withdrawal from the Paris Climate Agreement and other milestone executive orders.
Reacting, Yusuf said that the US decision to restart oil drilling may boost global crude supply, thereby leading to a reduction in global oil price, which will in turn impact negatively on Nigeria’s crude oil revenue.
He, however, added that a reduction in global oil price would reduce local energy prices, which is good for businesses and Nigerians.
The renowned economist also believed that Trump’s presidency would boost the US economy, thereby strengthening the dollar at the detriment of the Naira.
“If investment in oil and gas increases in the US, the US is a major oil producer that could increase the global supply.
“If the global supply of oil increases, energy prices are likely to fall. If the energy prices fall, that has implications for Nigeria’s revenue.
“It will negatively impact Nigeria’s oil revenue. But it may be positive for businesses because the reduction in crude price typically reduces the cost of energy locally. AGO, PMS and jet fuel prices will be reduced. It is a double-edged sword.
“That is one implication of Trump’s presidency.
“The second implication is that if Trump is able to calm down the conflict between Russia and Ukraine, (Russia is a major oil and gas producer)- and he has the potential to do that— then we are likely to see more production of oil; if that happens, oil production will increase and prices will drop.
“It will affect Nigeria’s oil revenue, but it will benefit businesses because the local price of energy will drop. That is the nexus between what will happen with Trump’s policy and Nigeria’s domestic economy.
“Trump’s policy is likely to strengthen the dollar.
“From all indications, investment and employment are likely to improve.
“We are already seeing indications in their stock market. Investors’ confidence is on the rise.
“Once you have that, it will impact the currency. The stronger the dollar, the weaker the naira,” he told DAILY POST.
DAILY POST reports that on Wednesday morning, Brent crude stood at $79.37, while the Naira to Dollar exchange rate stood at N1,552.78 at the close of business on Tuesday.
Nigeria relies on crude revenue as a key source of revenue for its annual budget.
Recall that Nigeria’s N49.7 trillion 2025 budget proposal that is currently before the National Assembly was benchmarked at $75 per barrel and an exchange rate of N1,500 per dollar.
