Nigerian Crude Trades Above $70, Exceeds 2026 Budget Benchmark Amid Rising Geopolitical Tensions

By Queen Madaki

Nigerian crude oil is trading above $70 per barrel, exceeding the Federal Government’s 2026 budget benchmark of $64.85, as geopolitical tensions and global supply risks continue to support prices.

Latest market data shows Bonny Light trading at approximately $71 per barrel, slightly down from $72.3 recorded on Monday. Despite the marginal pullback, prices remain comfortably above Nigeria’s fiscal planning assumption, providing potential upside for revenue projections.

This development forms part of broader global energy movements closely monitored under Nigeria News Today and reflects a market balancing geopolitical risk premiums against medium-term supply growth expectations.

Geopolitical Risk Supports Oil Prices

Oil has emerged as one of the best-performing asset classes this year amid heightened geopolitical uncertainty.

US military activity around the Red Sea ahead of renewed US-Iran nuclear talks in Geneva has increased market sensitivity to potential supply disruptions. Iranian naval exercises in the Strait of Hormuz — a critical route that handles roughly 20 million barrels of oil daily — have further elevated risk premiums.

Any disruption in that corridor could significantly impact global crude flows, tightening supply in the short term.

Supply Outlook Signals Medium-Term Balance

While geopolitical tensions support near-term prices, medium-term supply projections suggest a more balanced market.

The US Energy Information Administration (EIA) forecasts that global oil inventories will increase by an average of 3.1 million barrels per day this year, as production growth is expected to outpace consumption.

If realised, this build-up in stockpiles could moderate prices later in the year, particularly if global demand softens amid renewed trade uncertainties.

Fresh concerns have emerged after the US administration signalled plans to introduce new national security tariffs, including a proposed 15% global tariff, raising fears of slower global growth and reduced energy demand.

Market participants are also awaiting the release of the American Petroleum Institute (API) weekly crude inventory data for short-term directional signals.

Nigeria’s Budget Outlook Strengthened

The Federal Government’s 2026 budget is based on a conservative crude price assumption of $64.85 per barrel and a production target of 1.84 million barrels per day.

With Nigerian crude trading above benchmark levels, fiscal buffers could improve if prices remain elevated.

Production in January 2025 stood at approximately 1.48 million barrels per day, slightly below Nigeria’s OPEC+ quota of 1.5 million barrels per day.

Structural Improvements in the Oil Sector

Nigeria’s oil outlook has shown signs of structural improvement in recent months.

• Nigeria launched the Cawthorne crude grade (API 36.4°) in February 2026.
• Earlier introductions of Utapate (2024) and Obodo (2025) have diversified export offerings.
• The Dangote Refinery, with capacity exceeding 650,000 barrels per day, has significantly altered domestic refining dynamics.

During a recent site visit by NNPCL officials, the Dangote Refinery was reported to be operating at 661,000 barrels per day — above its designed capacity.

The refinery now supplies between 60 and 65 million litres of petrol daily to the domestic market and exports approximately 20 million litres of surplus product, reducing Nigeria’s historical dependence on imported refined fuel.

Security Gains and Investment Drive

Crude theft and pipeline vandalism had cost Nigeria billions in lost revenue in recent years. However, the 2025/2026 period recorded the first decline in reported losses in 16 years, supported by enhanced security task forces and community-based surveillance systems.

In January 2026, the Federal Government launched a licensing round covering 50 oil and gas blocks, targeting over $10 billion in new investment across undeveloped and intracontinental basins.

As oil prices remain above budget assumptions, Nigeria’s fiscal performance will depend on sustaining production growth while navigating global supply-demand uncertainties.

This energy market analysis is published by The Business Bureau as part of its ongoing Nigeria News Today coverage.