Oil Extends Gains, Naira Appreciates After CBN Eased Rate

Oil Extends Gains, Naira Appreciates After CBN Eased Rate

The rate cut by the apex bank was the first time in five years, marking a cautious but clear pivot in monetary policy as inflation shows consistent signs of easing.

Oil prices rose for a second day on Wednesday after the Central Bank of Nigeria cut interest rate on Tuesday by 50 basis points from 27.5 per cent in July to 27 per cent.

Brent futures rose 19 cents, or 0.3%, to $67.82 a barrel by 5:00 AM WAT.

The benchmark climbed by more than $1 a barrel on Tuesday as a deal to resume exports from Iraq’s Kurdistan stalled, halting pipeline shipments of oil from the region to Turkey despite hopes of a deal to end the deadlock, as two key producers asked for debt repayment guarantees.

Industry report also showed U.S. crude inventories declined last week, adding to a sense in the market of tightening supplies.

The naira on Tuesday appreciated to ₦1,487.36 per dollar in the official foreign exchange (FX) market.

The CBN’s cautious decision to reduce its benchmark interest rate, the Monetary Policy Rate (MPR), is part of efforts to stimulate economic growth.

At the close of trading yesterday, the naira recorded a marginal gain of 0.08 per cent, with the dollar quoted at ₦1,487.36 compared to ₦1,488.60 on Monday at the Nigerian Foreign Exchange Market (NFEM), according to CBN data.

In the parallel market, also known as the black market, the local currency held steady at ₦1,515 per dollar, street traders confirmed on Tuesday.

The rate cut by the apex bank was the first time in five years, marking a cautious but clear pivot in monetary policy as inflation shows consistent signs of easing.

Ongoing supply disruptions from Russia supported oil prices, but further gains are capped by uncertainty over U.S. Federal Reserve interest rate decisions.

Data showed crude stocks declined by 3.82 million barrels in the week ended September 19, the sources quoted by Reuters said, while gasoline inventories fell by 1.05 million barrels and distillate inventories rose by 518,000 barrels.

There are other signs of tightening supply, with Reuters reporting U.S. major Chevron will only be able to export about half of the 240,000 barrels per day of the crude it produces with partners in Venezuela.

Despite global tightening in crude oil production, output increased in Nigeria, according to the CBN Governor, Olayemi Cardoso, during a media briefing on Tuesday, when the interest rate cut was announced.

The country’s daily production of crude oil rose to 1.68 million barrels per day in the second quarter of 2025, a four-year quarter high since 2022, according to the National Bureau of Statistics (NBS).

Data released by the Nigerian Upstream Petroleum Regulatory Commission (NUPRC) also noted an output rise of 9.9% Year-On-Year in July 2025, averaging 1.71 million barrels of oil per day (bopd). The figure comprises 1.507 million bopd of crude oil and 204,864 bopd of condensates.

The naira had already sustained a positive momentum in the previous week, recording a modest appreciation against the US dollar at the official window, where it strengthened by 0.91 per cent week-on-week to close at ₦1,487.90 per dollar, representing a gain of ₦13.60. This performance was largely driven by sustained CBN interventions and steady foreign portfolio inflows, according to a report by Coronation Merchant Bank research.

In the parallel market, the naira also gained, appreciating by 0.66 per cent week-on-week to settle at ₦1,525 per dollar.