Oil Prices Surge As Naira Mounts Strong Comeback Against Dollar After CBN Rate Slash

Oil prices extended their rally for a second consecutive day on Wednesday, buoyed by the Central Bank of Nigeria’s (CBN) decision to lower its benchmark interest rate by 50 basis points—from 27.5 percent in July to 27 percent.

According to Channels Television, Brent crude futures climbed 19 cents, or 0.3 percent, to $67.82 per barrel as of 5:00 AM WAT. This followed Tuesday’s surge of more than $1 per barrel after stalled Kurdistan oil exports through Turkey created fresh supply concerns, with key producers demanding debt repayment assurances before resuming shipments.

Industry data also showed U.S. crude inventories fell last week, heightening fears of tightening global supply.

Naira Shows Resilience

At the official window, the naira strengthened slightly on Tuesday, appreciating to ₦1,487.36 per U.S. dollar from ₦1,488.60 on Monday—marking a 0.08 percent gain, CBN figures revealed. In the parallel market, however, the currency remained stable at ₦1,515 per dollar, according to street traders.

This marks the CBN’s first rate cut in five years, signaling what analysts describe as a cautious shift in monetary policy as inflationary pressures gradually ease.

CBN Governor Explains

Speaking on Tuesday, CBN Governor Olayemi Cardoso said the rate adjustment was designed to balance growth stimulation with price stability.

“Our monetary stance reflects confidence that inflation is moderating. The goal is to support investment and consumption without sacrificing stability,” he noted.

Global and Local Factors at Play

Beyond Nigeria, continued supply disruptions helped sustain elevated oil prices. Russian shipments remain restricted, while U.S. energy giant Chevron confirmed that Venezuela could only export about half of its daily 240,000-barrel production capacity.

U.S. data showed crude inventories dropped by 3.82 million barrels for the week ending September 19, while gasoline stockpiles fell by 1.05 million barrels. Distillates, however, rose by 518,000 barrels.

Nigeria, meanwhile, recorded an uptick in production. Figures from the National Bureau of Statistics (NBS) showed crude output rose to 1.68 million barrels per day in Q2 2025—the highest level since 2022. The Nigerian Upstream Petroleum Regulatory Commission (NUPRC) also reported an average of 1.71 million barrels per day in July 2025, representing a 9.9 percent year-on-year increase.

The naira had also shown strength in the previous week, appreciating 0.91 percent week-on-week to close at ₦1,487.90 per dollar. A research note from Coronation Merchant Bank attributed the improvement to steady CBN interventions and consistent foreign portfolio inflows.

In the parallel market, the naira gained 0.66 percent week-on-week, ending at ₦1,525 per dollar.