Plunging Oil Prices Pose Risks to Nigeria’s 2026 Budget Amid Increased Global Supply

Nigeria’s fiscal outlook for 2026 faces significant challenges as Brent crude prices have dipped below the government’s benchmark of $64.85 per barrel, driven by expectations of heightened global oil supply following recent U.S.-Venezuela developments.

On January 7, Brent crude settled around $60 per barrel, with spot prices hovering near $60.50 as of today, reflecting market reactions to U.S. President Donald Trump’s announcement of an agreement for Venezuela to transfer 30-50 million barrels of crude to the United States. This move, following the capture of Venezuelan President Nicolás Maduro, is anticipated to boost supplies to the world’s largest oil consumer and ease previous sanctions-related constraints on Venezuelan exports.

President Bola Tinubu’s N58.18 trillion 2026 budget, presented to the National Assembly on December 19, 2025, relies on a conservative oil price benchmark of $64.85 per barrel and projected production of 1.84 million barrels per day. The current shortfall in prices threatens revenue projections, exacerbating concerns over a N23.85 trillion deficit (4.28% of GDP) and heavy debt servicing obligations.

Compounding these issues, over 70% of the 2025 budget’s capital expenditures were rolled over into 2026 due to prior revenue shortfalls, including a N30 trillion gap against targeted collections. Analysts highlight the urgency for accelerated economic diversification to mitigate oil dependency.

Public policy expert Kingsly Obiakor noted: “With oil – our primary revenue source – trading below benchmark, this underscores the need to prioritize diversification efforts long advocated by the administration.”