Nigeria may soon face a significant drop in crude oil revenue as Indonesia finalizes a $10 billion energy deal to import more crude oil and liquefied petroleum gas (LPG) from the United States.
The move, announced by Indonesia’s Energy Minister Bahlil Lahadalia, is part of the country’s plan to balance trade with the U.S. and avoid a proposed 32% tariff on Indonesian exports.
“This is a strategic effort to reduce our trade surplus with the U.S. while securing long-term energy supplies,” Lahadalia said during a press briefing.
Nigeria at risk of losing key oil market
Indonesia has traditionally relied on Nigeria as one of its top crude suppliers. In 2023 alone, Nigeria earned over $3.8 billion from oil and gas exports to the Southeast Asian country.
Data from Kpler shows that Indonesia imported about 306,000 barrels of crude oil per day last year, with Nigeria, Saudi Arabia, and Angola leading the list of suppliers. In contrast, U.S. crude accounted for only 13,000 barrels per day.
With this shift, Nigeria’s share of Indonesia’s energy market could shrink significantly, especially if Indonesia cuts LPG imports from other countries by 20% to 30%, as planned.
Revenue blow for Nigeria’s oil sector
Crude oil remains Nigeria’s main source of foreign exchange, contributing N29 trillion in export revenue in 2023 — a 37% increase from the previous year.
But the potential loss of Indonesia as a key buyer could severely impact these gains, as Nigeria continues to struggle with fiscal pressures, subsidy removals, and inflation.
Analysts warn that a reduction in Indonesian purchases could disrupt Nigeria’s export balance and trigger wider concerns for its oil-dependent economy.
Looking ahead
Indonesia plans to spend between $18 billion and $19 billion on U.S. goods to reshape trade dynamics. Energy imports will play a major role in that strategy, likely to the detriment of Nigeria’s oil trade footprint in Asia.
The long-term effects on Nigeria’s economy remain to be seen, but this shift underscores the global competition for energy markets and the importance of diversifying export destinations.
