As global energy dynamics shift, the hydrocarbon industry, long under pressure from climate change concerns and the 2015 Paris Agreement, finds new hope in U.S. President Donald Trump’s policies. With increased U.S. oil production, Nigeria faces a complex challenge, yet remains optimistic about its future, exploring energy diversification and maintaining its oil industry prominence. It is a blessing in disguise for the Nigeria downstream industry, reports JOHN OFIKHENUA
The hydrocarbon industry, already on the brink, found a moment of relief last month. As countries, companies, and investors pulled back, redirecting their focus toward renewable energy development, the industry was caught in the wake of mounting concerns over climate change. Advocates of climate change have long argued that greenhouse gas emissions are responsible for the depletion of the ozone layer, sparking a series of global discussions that led to the 2015 Paris Agreement. This, in turn, contributed to the gradual decline in investment and growth within the oil and gas sector, which had been blamed for exacerbating climate change.
However, today’s statements by Trump represent a sharp departure from that narrative. The once looming fear that the industry would collapse by 2050 or 2060, as outlined in various countries’ energy transition plans, is now losing momentum. At the very least, hydrocarbon-producing nations remain optimistic that, regardless of how oversupply may drive prices down, oil—the “black gold”—will continue to thrive for the foreseeable future. In other words, the fear of oil asset abandonment has subsided. But the real question is: for how long will hydrocarbons dominate the energy landscape? Will the industry survive beyond the Trump administration? Will other superpowers follow the U.S. lead? Only time will tell.
Like any market, the petroleum industry is shaped by a complex web of variables, making it far from a simple equation. Take Nigeria, for example, a key member of the Organisation of Petroleum Exporting Countries (OPEC), which regulates global crude oil supply. While some countries exceed their OPEC output quotas for various reasons, others stick to the guidelines. Some countries surpass their quotas to build up strategic reserves, while others do so to compensate for past production losses or to prepare for future reductions in output. This analysis highlights that in 2025, the U.S. decision will not only impact the global oil market, but it will also force key organisations to re-evaluate their strategies, market projections, and output quota allocations.
With OPEC’s potential adjustments on the horizon, Nigeria, which has already set a target of over 2 million barrels per day in 2025, may reconsider its market outlook. For instance, the country could choose to grow its national reserves, regardless of OPEC’s decisions. Alternatively, it may view this as an opportunity to increase supply in line with its expanding refining capacity. Crude oil export remains Nigeria’s economic backbone, making any global developments in the industry a matter of national importance. For instance, the 2025 Appropriation Bill proposes a crude oil benchmark of 2.06 million barrels per day. If the U.S. boosts its production in the same period, it could drive down global oil prices, potentially undermining Nigeria’s revenue targets for the year.
Nigeria’s reliance on hydrocarbons extends beyond crude oil export to refined products. The cost of crude oil significantly influences the pricing of fossil fuels, so a dip in crude prices could lower product prices, which could, in turn, increase domestic demand. For example, the removal of the Premium Motor Spirit (PMS) subsidy in 2023 led to a reduction in national consumption as the rising cost of petrol prompted many motorists to alter their habits. If increased crude oil production results in lower petrol prices, there is hope that fuel could become more affordable for many Nigerians who have, in recent times, been forced to park their vehicles due to rising costs.
In response to how the decision may impact the oil industry, former Senate President Ahmed Lawan and Senior Legislative Officer Olabode Sowunmi expressed optimism that crude oil prices could experience a significant drop. However, Sowunmi, who is also the Chief Executive Officer of Cabtree Ltd, cautioned that while lower crude oil prices might seem likely, they don’t automatically guarantee a decrease in the prices of refined products. He emphasized that a range of other factors influence the cost of petroleum products in Nigeria, making it more complex than a simple correlation with crude oil price fluctuations.
He said, “The way it will affect us is the same way it will affect everybody else. It is going to be a case of more crude oil meaning that prices would go down. That is the primary way. It should make the cost of refining cheap. But because the cost of refining is cheaper does not mean those refineries will sell it cheaper. Dangote has borrowed money and he needs to pay back. That is not the reason for him not to reduce his price but there are many factors.”
On energy transition, he noted that Trump, who has always expressed his reservations for climate change, has already directed the US banks to withdraw their sealed energy transition agreements. According to him, the decision will free money for fossil fuels but may not automatically translate to increased financing for the Nigerian oil industry. He said, “The whole of energy transition is that it will reduce fossil fuels. First, Donald Trump has asked the American banks who signed to that agreement they will not fund fossil fuels. That means they must pull out. You see that very big American banks have pulled out. That means that they are going to have funding for fossil fuels activities. That is number one. Number two, it is once those activities of energy transition increase, it means that the goals and targets of energy transition is hit. So, generally speaking, it is going to sink the energy transition agenda.
“There should be funding for investment in the Nigerian oil and gas industry. But the fact that funding is available does not necessarily translate to investment. There are several factors that come into play. It is just like saying the fact that a bank has money means it would give anybody that goes to ask for money. It doesn’t work that way. There are factors that determine the Final Investment Decision that translates to funding.”
Energy consultant Mr. Henry Adigun expressed the view that while Donald Trump’s decision will have both positive and negative effects, Nigeria’s downstream industry stands to benefit significantly from the policy. “It was expected, and the impact will be both beneficial and have some negative consequences,” Adigun noted. “The benefits will be seen in the downstream sector, where increased supply will drive down crude prices, which in turn will positively affect the retail price of products.”
When asked how the decision would affect Nigeria, Dr. Billy Hary, National President of the Petroleum Products Retail Outlet Owners Association of Nigeria (PETROAN), called it a wake-up call for President Bola Ahmed Tinubu to take decisive action for the country’s future. He challenged Nigeria to prioritize its diversification efforts more than ever before. While acknowledging that increased oil production in the U.S. could lead to Nigeria losing some of its key partners, Hary urged the country to place greater emphasis on diversifying into agriculture and the mining of solid minerals.
His words: “Trump can rule his America and threaten the world. Let President Tinubu rule Nigeria and bring out the best of Nigeria, a world power in the making. USA decision to drill oil should be a catalyst for Nigeria to focus on our agriculture, solid minerals and manpower development. The decision to drill oil should not be a worry. Sure, but we should not brood over that. When they start to drill, we will tend to lose a trade partner.”
Meanwhile, Alhaji Abubakar Maigandi, National President of the Independent Petroleum Marketers Association of Nigeria (IPMAN), reassured that there is no cause for alarm. Speaking to The Nation via phone, he pointed out that the U.S. is not the only importer of Nigeria’s crude oil. According to him, African oil producers have the capacity to supply crude to their growing refineries. He cited the example of the 650,000 barrels per day Dangote Petroleum Refinery in Nigeria, emphasizing that the country is fully capable of producing and supplying crude oil to its refineries, regardless of how much the U.S. increases its own crude oil production. He said, “The U.S. is not the only buyer of Nigerian crude oil. If Africa supplies crude to its own markets and refineries, there will be no need to panic. Nigeria is up to the task.”
Maigandi further expressed confidence that President Tinubu possesses the business acumen needed to turn Nigeria’s economy around, regardless of the U.S. decision. He reassured that there is no cause for concern about any imminent downturn in Nigeria’s fortunes. However, despite the ongoing regulatory pressures, pro-energy transition investors may choose to withhold their funding rather than redirect it toward fossil fuels. Recognizing that Trump’s administration is temporary, many stakeholders may be hesitant to invest in the very fossil fuels they oppose. Instead, private investors are more likely to continue funding clean energy projects. This shift could lead to a temporary drop in prices for solar and other renewable energy technologies.
In Nigeria, where the adoption of renewable energy has been slow—largely due to thermoelectric and gas power generation making up over 75% of the country’s energy mix—energy transition efforts could face delays. While there is an abundance of untapped greenfields ready for development, the country’s existing technical know-how makes fossil fuels the more reliable choice for energy production, at least for now. This leaves the growth of renewable energy in the country still in its fledgling stages.
It’s worth noting that while the global energy transition target has been set for 2050, Nigeria has reluctantly adopted 2060 as its own year for achieving net-zero carbon emissions. The country has maintained that its contribution to global pollution is minimal, advocating for a just energy transition. In light of this, Trump’s decision to increase U.S. oil drilling aligns with Nigeria’s reluctance to move away from oil wealth. So, how has the global oil market reacted to Trump’s pronouncement? On January 21, 2025, Reuters reported a dip in oil prices following President Trump’s declaration of a national energy emergency on his first day back in office. The announcement fueled concerns of increased U.S. oil output in a market already expected to be oversupplied. As a result, Brent crude futures fell by 86 cents, or 1.1%, settling at $79.29 per barrel. Meanwhile, U.S. West Texas Intermediate (WTI) crude futures for February delivery dropped by $1.99, or 2.6%, closing at $75.89.
In Nigeria, the downstream market has mirrored the global market’s reaction. Over the weekend, the Dangote Refinery and Petrochemicals announced a significant reduction in the ex-depot price of Premium Motor Spirit (PMS) from N950 to N890 per litre. Anthony Chiejina, the Group’s Chief Branding and Communication Officer, explained that this strategic adjustment was a direct response to the positive outlook in the global energy and gas market, as well as the recent drop in international crude oil prices. By the end of the first quarter of 2025, Nigeria will likely have a clearer understanding of the direction of the petroleum market and will have made the necessary adjustments.
