U.S. President Donald Trump has vowed to impress on Saudi Arabia and the Organisation of Petroleum Export Countries (OPEC) to crash the price of crude oil in the global market, arguing that it would end the war between Russia and Ukraine.
Trump said this in his address to World Leaders at the World Economic Summit in Davos, Switzerland, on Thursday.
Trump had pledged to “end the Russia-Ukraine war immediately” he took office, with analysts predicting that he would side with Russia’s President Vladimir Putin. However, his latest pronouncement suggests he attempts to mount pressure on the Kremlin by crashing oil prices.
The U.S. President who has made several disruptive pronouncements since he took office on Monday, argued that crashing global oil prices would also reduce inflation in America and other parts of the World.
He said: “And I’m also going to ask Saudi Arabia and OPEC to bring down the cost of oil. You got to bring it down, which, frankly, I’m surprised they didn’t do before the election. That didn’t show a lot of love by them not doing it. I was a little surprised by that.
“If the price came down, the Russia-Ukraine war would end immediately. Right now, the price is high enough that that war will continue. You got to bring down the oil price; you’re going to end that war. They should have done it long ago. They’re very responsible, actually, to a certain extent, for what’s taking place — millions of lives are being lost.
“With oil prices going down, I’ll demand that interest rates drop immediately. And, likewise, they should be dropping all over the world. Interest rates should follow us.”
- Washington’s sanctions on Russia’s oil and gas industry days before Trump was sworn in disrupted the global crude oil supply chains and dipped Russia’s oil exports.
- Oil refiners in China and India urgently sought alternatives for crude by turning to OPEC giants in the Middle East for long-term supplies.
It was observed that oil prices turned negative after Trump’s speech dropping slightly below $80. According to Financial Times’ Market Data, Brent crude oil stands at $78.35 on Friday morning.
What does this mean for Nigeria?
- The Federal Government of Nigeria has benchmarked the 2025 budget and the 2025-2027 Medium Term Expenditure Framework (MTEF) on a global oil price of $75 per barrel. A crash below this will have an adverse effect on Nigeria’s revenue.
- As Nigeria continues to rely on oil exports for a large share of its revenue, it struggles to increase its production and compete with top oil-producing countries in the world.
- Meanwhile, experts have advised the Nigerian government to focus on increasing production and compete in the global crude oil market, whether the price crashes or goes up.
- A crash in global oil prices will also bring down retail prices of petroleum products. The recent rise in global price resulted in the latest hike in the price of fuel which currently sells around N1,000 per litre.
