Global crude oil prices remained firm at the start of the trading week on January 26, 2026, holding above Nigeria’s benchmark price for its 2026 fiscal plan. This stability provided temporary fiscal reassurance to Nigerian planners amid persistent supply constraints and escalating geopolitical tensions in the Middle East.
Brent crude, the international benchmark, traded just under $66 per barrel after a marginal decline in early sessions, according to data from Trading Economics and market reports. It had risen 0.38% to $66.13 by midday, reflecting a 7.54% monthly gain but still 14.21% lower year-over-year. U.S. West Texas Intermediate (WTI) hovered slightly above $61 per barrel. The modest dip followed a strong rally in the prior session, where prices surged more than 2%, extending gains for a fifth consecutive week. Both benchmarks closed the previous week with nearly 3% advances, marking their highest levels in several weeks.
The market's resilience stems from a mix of tightening global supply and heightened geopolitical risks. In the United States, adverse winter weather—particularly a severe storm system named Fern—has curtailed output in key producing regions. Frigid conditions froze wells and disrupted operations across shale fields in North Dakota (Bakken), Oklahoma, and Texas, as well as parts of the Permian Basin in West Texas and New Mexico. Reports indicated losses of around 250,000 barrels per day due to these disruptions, tightening supply at a moment when global inventories remain vulnerable to shocks. Energy analysts noted that such weather-related curtailments, including declines in natural gas alongside crude, have added upward pressure despite broader oversupply concerns.
Geopolitical developments in the Middle East have further bolstered the risk premium. Renewed threats from U.S. President Donald Trump against Iran, including warnings of potential military action, have stoked fears of supply disruptions. Iranian officials issued strong cautions about consequences for any attacks, amplifying trader caution. The deployment of additional U.S. military assets in the region—echoing earlier escalations—has heightened concerns over major supply routes like the Strait of Hormuz. While no major disruptions have materialized yet, the uncertainty has supported prices even as some analysts point to muted responses in past incidents.
For Nigeria, these global dynamics carry profound fiscal implications. The economy remains heavily reliant on crude oil revenues, which fund government budgets, foreign exchange earnings, and debt servicing. President Bola Tinubu's administration anchored the 2026 budget—presented in December 2025 and totaling around N58.18 trillion—on a conservative oil price benchmark of $64.85 per barrel (though the Senate later adjusted it downward to $60 in the Medium-Term Expenditure Framework). Production targets were set at 1.84 million barrels per day (mbpd), with an exchange rate assumption of N1,400 to the dollar.
Current Brent levels above $64.85 (and often near $66) offer a short-term buffer, potentially easing revenue pressures and supporting deficit management. The budget projects significant oil-derived inflows—estimated at N60.97 trillion gross—critical for capital expenditure, infrastructure, and social programs amid ongoing economic reforms. However, the margin is narrow: prices had dipped below the benchmark in recent days, reviving worries about shortfalls if volatility persists. Analysts from firms like CardinalStone have warned that averages closer to $55 in 2026 could strain assumptions, leading to heavier borrowing or under-delivery on spending.
Domestic challenges further complicate Nigeria's ability to capitalize on favorable prices. Longstanding issues in the Niger Delta—pipeline vandalism, crude oil theft, aging infrastructure, and operational inefficiencies—have chronically constrained output. Despite improvements, production has historically fallen short of targets; 2025 averages hovered around 1.65 mbpd against higher ambitions. Recent military efforts, including operations by the 6 Division Nigerian Army under Operation DELTA SAFE, reported zero vandalism incidents in their area of responsibility over the past year, crediting intelligence-led patrols, community engagement, and collaboration. This contributed to output rising to about 2.2 mbpd by late 2025 in some assessments, though national figures remain lower.
Experts emphasize that elevated global prices alone cannot ensure fiscal stability without addressing these structural hurdles. Enhanced security has reduced theft—once claiming massive volumes—but aging pipelines still cause leaks, often misattributed to sabotage. Sustained reforms in infrastructure integrity, community relations, and efficiency are essential to consistently meet or exceed targets.
Broader market forecasts add caution. The International Energy Agency (IEA) and Goldman Sachs project oversupply in 2026, with inventories building and prices potentially averaging $56–$58 for Brent, driven by non-OPEC growth (U.S., Brazil, Guyana) outpacing demand. Geopolitical risks could trigger short spikes, but structural surpluses may cap gains. OPEC+ has held output steady into early 2026, avoiding increases during traditionally weak demand periods.
For Nigeria, the current firmness above the benchmark offers breathing room as fiscal implementation begins. It underscores the interplay between global events—U.S. weather disruptions, Middle East tensions—and domestic realities. While providing optimism for revenue, the narrow buffer highlights vulnerability to shifts. Policymakers must prioritize production enhancements to fully leverage market support, ensuring long-term economic resilience beyond transient price relief.
