Global oil prices remained steady on Monday, maintaining levels above Nigeria’s 2026 budget benchmark of $64.85 per barrel, as ongoing supply disruptions and escalating geopolitical tensions in the Middle East continued to support the market.
This information comes from market reports tracking Brent and U.S. crude futures reported by Reuters.
The resilience in prices provides some relief for Nigeria’s fiscal planning but also highlights ongoing risks.
Oil prices showed a slight decline early Monday, with Brent crude futures dipping by 7 cents, or 0.1 per cent, to $65.81 per barrel as of 02:21 GMT.
Meanwhile, U.S. West Texas Intermediate (WTI) crude eased by 6 cents, or 0.1 per cent, to $61.01 per barrel.
The small pullback followed a strong rally in the previous trading session, where prices surged over 2 per cent.
Both benchmarks posted weekly gains of approximately 2.7 per cent on Friday, closing at their highest points since mid-January.
What the data is saying
Global oil markets remain pressured by supply tightness and geopolitical risks, pushing prices higher despite minor dips.
The trend is driven mainly by U.S. production losses and rising Middle East tensions.
- JPMorgan reported that harsh weather conditions have cut around 250,000 barrels per day of U.S. crude output, affecting production in the Bakken shale, Oklahoma, and Texas.
- The arrival of a U.S. military aircraft carrier strike group in the Middle East has raised fears of disruptions to key oil supply routes.
- An Iranian official’s warning that any attack on Iranian territory would be considered “an all-out war” added to market unease.
These factors collectively add a risk premium to oil prices, underpinning the recent gains despite minor pullbacks.
Get up to speed
Nigeria’s oil-dependent economy heavily relies on stable crude prices to fund its budget and manage foreign exchange earnings.
The country’s 2026 budget was set with an oil price benchmark of $64.85 per barrel and a production target of 2.6 million barrels per day (mbpd).
These assumptions are critical for revenue projections and fiscal sustainability.
Last week, prices briefly fell below the benchmark, raising concerns among policymakers and analysts about potential revenue shortfalls.
Historically, Nigeria’s oil sector has faced challenges such as pipeline vandalism, oil theft, and production inefficiencies, which often undermine its ability to meet production targets even when prices are favorable.
The current price stability above the benchmark offers a buffer but does not eliminate underlying risks to Nigeria’s fiscal outlook.
What you should know
The recent price gains provide optimism, but challenges remain:
- The government has approved the oil benchmark price amid concerns about revenue stability.
- Falling below this price could strain government finances and impact budget execution.
- Domestic production hurdles, including pipeline vandalism and oil theft, must be addressed to meet targets.
While the current oil price environment supports Nigeria’s fiscal assumptions, long-term stability depends on both external market conditions and internal production realities.
Earlier, Nairametrics reported that Nigeria’s fiscal deficit jumped to N13.51 trillion in 2024, exceeding targets and breaching the FRA 2007 deficit-to-GDP limit.
