Global oil prices held firm on Monday, trading comfortably above Nigeria’s 2026 budget benchmark of $64.85 per barrel, supported by ongoing supply constraints and heightened geopolitical risks in the Middle East.
Brent crude futures eased marginally by 7 cents (0.1%) to $65.81 per barrel by 02:21 GMT, while U.S. West Texas Intermediate (WTI) slipped 6 cents (0.1%) to $61.01 per barrel. The small pullback came after both benchmarks posted a strong rally the previous session, gaining over 2%, and closed the week up approximately 2.7% — their highest weekly finish since mid-January.
The resilience in crude prices offers Nigeria a welcome fiscal cushion at a time when the country’s budget relies heavily on stable oil revenues. The 2026 Appropriation Bill was built on an oil price assumption of $64.85 per barrel and a production target of 2.6 million barrels per day (mbpd). Prices dipping below this level last week had sparked concerns about potential revenue shortfalls, but the current levels provide breathing room for fiscal planning.
Market support stems from a combination of supply-side tightness and geopolitical developments:
– Harsh weather in the United States has reduced crude output by an estimated 250,000 barrels per day, affecting key producing regions including the Bakken shale, Oklahoma, and Texas (JPMorgan data).
– Escalating tensions in the Middle East, including the deployment of a U.S. aircraft carrier strike group to the region, have raised fears of possible disruptions to critical shipping lanes.
– An Iranian official’s statement warning that any attack on Iranian territory would trigger “an all-out war” added to the risk premium embedded in prices.
These factors have kept upward pressure on oil despite occasional minor corrections, helping Brent and WTI maintain levels well above Nigeria’s conservative budget benchmark.
For Nigeria where oil remains the backbone of government revenue and foreign exchange earnings — the price stability is a positive development. However, analysts caution that favourable global prices alone do not guarantee fiscal comfort. Domestic production challenges, including pipeline vandalism, crude oil theft, and operational inefficiencies, continue to prevent the country from consistently hitting its output targets.
The recent price environment stands in contrast to 2024, when Nigeria’s fiscal deficit ballooned to N13.51 trillion exceeding targets and breaching the Fiscal Responsibility Act 2007 deficit-to-GDP limit. Sustained prices above $64.85 would help ease some of the strain on budget execution, but long-term revenue stability hinges on both external market conditions and internal reforms to boost domestic crude production.
As Middle East tensions remain elevated and U.S. weather-related output losses persist, oil markets are likely to stay sensitive to any escalation or resolution in geopolitical risks. For Nigerian policymakers, the current levels offer cautious optimism — but the margin for error remains narrow given the country’s heavy dependence on crude exports.
