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The Nigerian currency, the Naira which has been gradually appreciating on the back of new reforms may be under pressure as there is a huge amount of crude oil at sea.
The crude glut suggests demand for the oil is falling way short of supply, according to OilPrice.com, a leading energy news site.
China, the world’s largest importer of crude oil, has been stockpiling it at a rate of close to 1 million barrels daily since the start of the year.
The Vortexa data that Bloomberg cited said that there were 1.2 billion barrels of crude oil currently at sea, being moved from one place to another. Bloomberg’s Alex Longley noted that this was the highest amount of oil in transit since 2016 and is the result of higher production from key countries.
A supply glut reduces the price of crude oil to the detriment of oil producing countries who rely on such revenue to run their economies.
Since oil accounts for over 90 percent of foreign exchange earnings and two-thirds of government income in Nigeria, a further crash in the price of the commodity will significantly undermine the local currency Naira.
As of Friday, according to the central bank, the Naira traded within the range of N1,440/US$ – N1,485/US$ and appreciated by 27bps to close at N1,466.65/US$ at the NAFEM window. Furthermore, the gross external reserves increased by 0.07% to close at US$42.57bn as of 9th October 2025.
It is important to note that the reforms of the current administration is attracting foreign portfolio investment as investors are buying Naira assets that they jettisoned due to capital controls imposed by the central bank under former president Muhammadu Buhari.
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