Plan for your Naira: “The International Energy Agency (IEA) has warned that global oil supply may exceed demand by approximately 600,000 barrels per day (bpd) in 2025, posing a serious risk of oversupply in the market…Nigeria’s 2025 budget is built on the assumption of oil production at 2.06 million barrels per day (bpd), an oil price of $75 per barrel, and a revenue target of N36.35 trillion, with 56% expected to come from oil sales”

While diversification efforts in agriculture and manufacturing have been touted as long-term solutions, the short-term reality is that Nigeria’s fiscal stability remains heavily tied to oil prices. Any significant downturn in oil revenue could trigger new austerity measures, adding more strain to an already struggling economy.

With the IEA’s outlook painting a bearish picture for oil markets, analysts are urging Nigeria’s policymakers to closely monitor OPEC+ decisions in the coming months. If crude prices fall far below $75 per barrel, the government may be forced to revise its revenue projections downward and seek alternative funding sources.

Let me ask you, do you have a strategy on how this could impact the Naira? If the global economy enters a recession and they do not need a lot of oil, it will affect everyone in Nigeria. And if Russia is normalized with sanctions removed, enabling it to enter the mainstream oil market, the equilibrium will shift. So, have a plan because 2025 will be interesting!

IEA Warns of Oil Surplus in 2025 as Weaker Demand Puts Pressure on Producers, Nigeria Stands At Risk

Tesla’s stock has suffered a steep decline, plummeting 48% since reaching its peak in mid-December, yet longtime investor Ross Gerber still isn’t convinced it’s cheap enough to buy back in.

Gerber, a seasoned Tesla investor who had loaded up on the stock before its meteoric rise, predicted earlier this year that shares could fall by as much as 50%. His foresight has proven accurate, as the stock has continued its downward trajectory, losing another 31% since his late-February forecast.

Despite the sharp drop, Gerber is holding back on re-entering the market. In an interview with Business Insider, he reiterated his belief that Tesla lacks a clear recovery path in 2025, citing multiple challenges including CEO Elon Musk’s divided attention between Tesla and his other ventures—Dogecoin (DOGE), SpaceX, xAI, and X (formerly Twitter).

Gerber, who leads Gerber Kawasaki Wealth & Investment Management, a firm overseeing approximately $3 billion in assets, has not hesitated to put his words into action. He cut his firm’s Tesla holdings by 31% in 2024, reducing his position to 262,000 shares, valued at $106 million at the close of last year, according to regulatory filings.

Tesla’s Path to Recovery Remains Unclear

Gerber argues that for Tesla to regain momentum, it must significantly increase its earnings. “If I do $5 in earnings, at 50 times earnings, I can get to $250,” he explained. “But they have no path to that.”

Tesla’s earnings per share (EPS) took a significant hit in 2024, plummeting 52% to $2.04. Analysts estimate earnings will rebound to $2.75 per share in 2025 and $3.65 in 2026, but these projections remain uncertain in the face of economic headwinds and declining global sales.

Political Controversies Weigh on Tesla’s Brand

Gerber also sees Musk’s controversial political stances as a lasting headwind for Tesla. He pointed to Musk’s alleged Nazi salute at the presidential inauguration, the CEO’s divisive political rhetoric, and President Donald Trump’s public promise to buy a Tesla to support the brand.

According to Gerber, such polarizing actions have alienated many customers, further dampening the stock’s appeal. “The decline of a stock trading at 150 times earnings is the farthest thing from surprising in my book,” he noted.

Tesla’s Valuation Remains Expensive

Despite the substantial correction, Gerber insists that Tesla is still overvalued. The stock currently trades at a forward price-to-earnings (P/E) ratio of 65—more than triple the valuation multiple of the S&P 500.

“As a traditional investor, it doesn’t fit any valuation system that makes sense compared to any other stock,” Gerber remarked. He contrasted Tesla’s valuation with Nvidia, which trades at a much lower P/E ratio of around 20 times earnings, has projected earnings growth of 75% this year, and is actively buying back stock.

External Market Pressures and Growth Concerns

Broader macroeconomic conditions also weigh on Tesla’s valuation. Investors are increasingly skeptical about the company’s long-term growth prospects as analysts revise vehicle sales estimates downward for the second consecutive year.

The uncertainty surrounding President Trump’s proposed tariffs has added another challenge, pushing investors to demand a lower earnings multiple for Tesla’s stock.

“If Tesla trades at even 50 times forward earnings—which translates to a $290 per share valuation—giving them $3 per share still only gets you to $150,” Gerber explained. “Yet, the stock is still trading at $225, meaning it could have further to fall.”

The Used Car Market Poses Another Challenge

Another significant issue affecting Tesla is the used-car market. Ironically, the very quality that made Tesla vehicles desirable—durability—is now hurting the company. Gerber likened Tesla’s problem to Apple’s, where product longevity reduces the frequency of upgrades.

“Teslas don’t wear out very quickly, so you don’t have a lot of repeat demand,” he said. “A 5-year-old Tesla is just as good as a 2-year-old Tesla.”

This dynamic, combined with the growing number of Tesla owners selling their cars due to Musk’s political controversies, has led to plummeting resale values. The drop in used Tesla prices is creating a situation where prospective buyers have little incentive to purchase new models directly from the company.

“Unless the hardware is significantly better than previous versions, consumers—especially price-conscious ones in an inflationary environment—have no strong reason to upgrade,” Gerber noted. “This hurts Tesla’s new car sales while also eroding the value of its existing vehicles.”

Tesla’s sharp stock decline has left investors questioning its valuation, growth prospects, and the impact of Musk’s broader ambitions on the company’s future. While Gerber was once a strong Tesla bull, he remains skeptical about the stock’s ability to rebound anytime soon. Gerber’s staying on the sidelines—highlights broader concerns that the stock, even after its sharp correction, still isn’t cheap enough for traditional investors.

The International Energy Agency (IEA) has warned that global oil supply may exceed demand by approximately 600,000 barrels per day (bpd) in 2025, posing a serious risk of oversupply in the market.

In its latest Oil Markets Report, the agency also downgraded its demand growth estimates for 2025, citing underwhelming consumption data and economic uncertainty.

The report signals trouble for major oil-exporting economies like Nigeria, as the Organization of the Petroleum Exporting Countries (OPEC) may respond by cutting production quotas for member nations in an attempt to stabilize the market.

The IEA cautioned that if OPEC+ proceeds with plans to unwind production cuts beyond April, and if member countries currently exceeding their quotas do not rein in output, an additional 400,000 b/d could be added to the market.

This raises the likelihood of a significant price decline, as global oil demand has not grown as strongly as expected. The situation puts oil-dependent economies like Nigeria at risk, especially since any reduction in crude prices could further strain government revenues.

The IEA also noted that uncertainty surrounding global trade policies and potential tariffs could further distort market expectations. The agency emphasized that the scope and scale of tariffs remain unclear, and with trade negotiations continuing, it is still too early to assess the impact on the market outlook.

The IEA has cut its demand growth projections for the fourth quarter of 2024 and the first quarter of 2025, lowering its estimate to 1.2 million barrels per day (mb/d) due to weaker-than-expected consumption patterns. Despite the downgrade, the agency still projects total oil demand growth in 2025 at just over 1 mb/d, up from 830,000 b/d in 2024, bringing global consumption to 103.9 mb/d. However, this is lower than its February forecast, which predicted 1.1 mb/d growth.

Nigeria Faces Potential Revenue Shortfalls

Nigeria’s 2025 budget is built on the assumption of oil production at 2.06 million barrels per day (bpd), an oil price of $75 per barrel, and a revenue target of N36.35 trillion, with 56% expected to come from oil sales. However, Nigeria is currently struggling to produce even 1.5 mbpd, well below the 2.06 mbpd target. If OPEC decides to cut production quotas further, Nigeria’s ability to meet its revenue expectations will be severely impacted.

Compounding this challenge, the 2025 budget already has a deficit of N14 trillion, meaning that any shortfall in oil revenue will widen the funding gap, potentially forcing the government to resort to more external and domestic borrowing, and additional taxes and levies to cover the revenue shortfall.

Asia Remains the Growth Driver, But With Changing Demand Trends

The IEA predicts that Asia will account for nearly 60% of oil demand growth in 2025, with China leading the charge. However, there is a notable shift in the type of demand driving this growth. Petrochemical feedstocks will dominate oil demand in China, rather than traditional fuels. Demand for gasoline and diesel is plateauing, signaling slower growth in transportation fuel consumption.

This shift could pose additional challenges for Nigeria, as its crude oil blend is more suited for transportation fuels rather than petrochemical production.

What’s Next for Nigeria?

While diversification efforts in agriculture and manufacturing have been touted as long-term solutions, the short-term reality is that Nigeria’s fiscal stability remains heavily tied to oil prices. Any significant downturn in oil revenue could trigger new austerity measures, adding more strain to an already struggling economy.

With the IEA’s outlook painting a bearish picture for oil markets, analysts are urging Nigeria’s policymakers to closely monitor OPEC+ decisions in the coming months. If crude prices fall far below $75 per barrel, the government may be forced to revise its revenue projections downward and seek alternative funding sources.