Nigeria could face a sharp decline in oil revenue from 2030 as global demand for crude is expected to weaken, according to a report by E3G, a climate and energy think tank.
The report warned that Nigeria’s heavy reliance on oil income could expose the country to serious fiscal and economic challenges as more countries shift towards renewable energy and electric vehicles.
It projected that Nigeria’s oil revenue could decline by more than 60 per cent from 2030 as global crude demand begins to slow.
The report said global oil consumption is expected to reach its peak around the early 2030s before entering a period of decline. This would increase competition among oil-producing countries for a smaller pool of buyers.
Countries with lower production costs, large reserves and stronger infrastructure, such as Saudi Arabia and the United Arab Emirates, are expected to be better positioned to withstand the decline in demand.
However, countries such as Nigeria, which have higher production costs and less diversified economies, could suffer significant revenue losses.
The report projected an even larger decline for Algeria, with its oil revenue potentially falling by 87 per cent.
E3G warned that a prolonged fall in oil income could make it difficult for affected countries to finance public services and meet debt obligations, potentially creating wider economic and security problems.
Beth Walker, a co-author of the report, said many governments were not adequately preparing for the financial consequences of falling oil demand.
She warned that fiscal problems in oil-producing countries could develop into unrest, migration and wider security challenges.
Nigeria was identified as a particular concern because of its large population and strategic importance in Africa.
The report noted that the global shift away from fossil fuels is already affecting oil consumption, with renewable energy expanding rapidly in several markets.
China, one of the major drivers of global oil demand in recent years, has also begun recording weaker consumption, partly due to the growing use of electric vehicles.
The future demand for oil in India could also play an important role in determining how quickly global consumption falls.
The researchers said slowing the energy transition would not provide a lasting solution, arguing that oil-producing economies need to prepare for changes in the global energy market.
The study, which was conducted over two years, used different scenarios involving falling oil demand and included discussions with more than 100 public officials and experts globally.
It called for governments and international financial institutions, including the International Monetary Fund and World Bank, to support oil-dependent countries as they prepare for declining petroleum revenues.
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