Nigeria's trade surplus nears 4-year high as oil exports rise

Nigeria’s trade surplus surged to the highest in nearly four years in the second quarter of this year, a BusinessDay analysis of the latest foreign trade statistics report has shown.

The National Bureau of Statistics (NBS) report shows that the country recorded a positive trade balance of N1.29 trillion for the third straight quarter in Q2, a 38.7 percent increase from N927.2 billion in the previous quarter. It rose by 27.7 per cent from N1.01 trillion on a year-on-year basis.

A trade surplus, an economic measure of a positive trade balance, occurs when a country’s exports exceed its imports.

A report breakdown revealed that total exports, contributing 55.1 per cent to total merchandise trade (N12.7 trillion), grew by 8.2 per cent to N7.01 trillion in Q2 from N6.48 trillion in Q1.

Imports’ trade share of total trade accounted for 44.9 per cent of real work as it rose marginally by 2.9 per cent compared to N5.72 trillion from N5.55 trillion.

Exports trade was dominated by crude oil exports valued at N5.57 trillion, which accounted for 79.6 per cent of total exports, In comparison, non-crude oil export value stood at N1.43 trillion or 20.4 per cent of total exports, of which non-oil products contributed N688.7 billion, representing 9.82 per cent of total exports.

“The country was bound to have an improvement in exports because of the recovery in the country’s crude oil production and stable global oil prices. Last year, we were doing less than one million barrels per day,” Ayorinde Akinloye, an investor relations analyst at Seplat Energy Plc, said.

Ikemesit Effiong, head of research at SBM Intelligence, an Africa-focused geopolitical research and strategic communications firm, said oil production vastly improved due to a combination of a seasonal spike in European demand and the coming online of critical Nigerian crude grades, which have been under “force majeure.”

“It’s worth noting that these trends are unlikely to hold in the medium term because fierce competition from Russian and Middle Eastern crude in the Asian market plus uncertainty in the security environment of key oil producing areas in the Niger Delta is increasingly forcing Nigerian producers to sell crude at a discount,” he said.

Crude oil production is a significant source of revenue for the federal government for Africa’s biggest economy. According to the Nigerian Upstream Petroleum Regulatory Commission, the country produced 1.25 million barrels per day in June from 998,602 barrels per day in April. On a year-on-year basis, it also rose from 1.16 million barrels per day in June 2022.

Data from information websites like Oilprices.com and statistics show that global Brent oil prices averaged $74.84 per barrel in June from 82.5 per barrel in January.

“Crude oil exports drove the growth in the trade balance. We had experienced low crude oil production last year before the subtle pick up this year,” Abiodun Keripe, managing director at Afrinvest Consulting Limited, said.

He added that the marginal growth in imports due to the Foreign Exchange (FX) liquidity challenges improved exports marginally and a further recovery in the trade balance, which is positive for the economy.