Right now, in early 2025, one barrel of crude oil costs around $85. With the exchange rate at about 1 dollar to 1,400 naira, that means one barrel is over 120,000 naira! For crude oil to drop to just 500 naira, the price would have to crash by more than 99%. That’s almost impossible!
Oil prices have never been that low. The closest was in April 2020, during the COVID-19 pandemic. At that time, U.S. oil prices went below $0, but that was only on paper. Real oil, the kind people use, was never sold for that cheap. And not for 500 naira per barrel.
In Nigeria, it costs between $15 and $30 to produce one barrel of oil. That’s about 21,000 to 42,000 naira. So if the price dropped to just 500 naira, oil companies would lose a lot of money and stop producing oil.
Oil prices stay high for many reasons. First, the world still uses over 100 million barrels of oil every day. That’s a huge demand! Also, big oil-producing countries like Nigeria and Saudi Arabia work together to control how much oil is sold, which helps keep prices steady. Wars and political problems, like the war in Ukraine, can also make oil prices go up quickly.
Some people aren’t talking about crude oil, though. They’re talking about the fuel we use in our cars. Could fuel prices in Nigeria drop to 500 naira per liter? Maybe, but only if a lot of things go right.
Nigeria now has new refineries in Port Harcourt, Warri, and a huge one called the Dangote refinery. These could help lower fuel prices because we won’t have to import as much fuel. If Nigerian refineries buy crude oil using naira instead of dollars, that would also help bring costs down. A stable exchange rate, where the naira doesn’t keep falling, would also make fuel cheaper. And if more refineries open, the competition could help lower prices, too.
But there are still risks. Global oil prices can change suddenly. If the naira gets weaker again, prices could rise. Also, if our refineries don’t work well, they won’t help much. Government policies, like taxes or subsidies, also affect fuel prices.
The Bottom Line:
Crude oil dropping to 500 naira per barrel is nearly impossible; it costs much more to produce, and the global market wouldn’t allow it. But fuel prices dropping to 500 naira per liter? That’s possible, but only if our refineries work well, the naira stays strong, and the government makes smart choices.