Nigeria’s economic recovery has been dealt a heavy blow as a shift in electric vehicles (EV) in China and the United States and a return to normal consumption after last year’s bounce following COVID-19 means global petrol demand growth could halve in 2024, according to Reuters news.
In the lowest growth since 2020, demand is likely to rise 340,000 barrels per day (bpd), to stand at 26.5 million bpd this year, says consultancy Wood Mackenzie, down from growth of 700,000 bpd last year, as China nears the point of peak transport fuel demand and the U.S. has surpassed it.
China, once the world’s driver of gasoline demand, is expected to account for more than half of all EV sales this year, the International Energy Agency has said.
There are fresh concerns that increasing demand for electric cars in the world’s largest exporters could undermine oil producer’s earnings.
Nigeria will be hard hit by this latest development because crude oil accounts for nearly all foreign exchange earnings and two-thirds of government revenue.
The country has not yet recovered from the precipitous drop in oil price of mid-2014 brought by a supply glut caused by the shale oil producers who used fracking to inundate the market with the product.
Oil theft and pipeline vandalism have crimped output. While oil output hit 1.48 million barrels per day (bpd) in February, it is still below a budget target of 1.78 million bpd.
Of course, the economy has been battered by a severe foreign currency scarcity, red-hot inflation and corruption.
A currency devaluation to spur foreign direct investment and the removal of subsidy on fuel tipped more people into poverty as the country lost its revered position as the largest economy.
It is important to note that headline inflation rate reached 33.2 percent in March 2024. This represents a 1.5 percentage points year-on-year (YoY) increase from 31.7 percent recorded in February 2024.
Considering the entire year of 2023, Nigeria’s economic growth reached 2.74 percent, compared to 3.10 percent a year earlier. President Tinubu’s administration is targeting a growth rate of about 3.8 percent in 2024 and 6 percent or more in the coming years.
However, Reuter’s news stated that booming car sales, along with high economic growth and low EV penetration, are driving gasoline demand in India and Indonesia.
“India’s petrol consumption will hit a fresh record of 39.2 million tons (908,000 bpd) in the year to March 2025, up about 5 percent from 37.2 million tons in the year to March 2024, government estimates showed’’ said the news agency.
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