Nigeria Faces Fresh Revenue Windfall As Oil Rallies To $107/b

….But fuel price rise looms

Nigeria stands to earn significantly more from crude exports after Brent crude surged past $107 per barrel on Thursday, more than $42 above the $64.85 benchmark the federal government used to draft its 2026 budget.

Brent climbed to $107.31 per barrel, while West Texas Intermediate crossed $101.86, as attacks on tankers and energy infrastructure in the Middle East intensified. Iran said it struck 10 ships near the Strait of Hormuz on Wednesday, while the United States hit five Iranian oil tankers, deepening fears of a prolonged disruption to global supply.

For Nigeria, whose 2026 budget assumed oil production of 1.84 million barrels per day and an oil price of $64.85 per barrel, the widening gap between that benchmark and current market prices points to higher government receipts from petroleum royalties, taxes and other oil-related revenues, should elevated prices hold.

Analysts said the rally, if sustained, could strengthen the country’s fiscal position, boost foreign exchange reserves and support exchange rate stability. Muda Yusuf, chief executive of the Centre for the Promotion of Private Enterprise, had said higher oil prices typically improve Nigeria’s current account position and foreign exchange liquidity, and could reduce short-term pressure on the naira.

However, industry observers cautioned that Nigeria’s ability to capture the windfall depends on its capacity to sustain or raise crude production, which has repeatedly fallen short of budget targets due to pipeline vandalism, oil theft and underinvestment in the upstream sector.

The rally also carries downside risk for Nigeria’s refined petroleum products. Petrol, Diesel and other refined fuel prices had already tightened during the conflict as refinery disruptions in the Middle East and Russia reduced product availability, and analysts said a sustained rise in crude could push up landing costs and pump prices, with knock-on effects for transport, manufacturing and food costs.

Globally, the latest surge marks a return to triple-digit oil prices after Brent briefly touched the $70 range in early July. It had earlier peaked at $126.41 per barrel in April before easing as Washington and Tehran temporarily halted attacks, hopes that have since faded with renewed fighting.

Tanker traffic through the Strait of Hormuz, which handles about one-fifth of global oil and gas supplies, has fallen below 2 million barrels per day, compared with 8 million to 9 million barrels per day during a brief lull in the conflict. Iran-aligned Houthi forces have also intensified attacks in Yemen and Saudi Arabia, seizing the port of Mocha on Thursday and threatening the Bab el-Mandeb Strait, a key route linking the Red Sea and the Indian Ocean.

OPEC’s crude production fell by 640,000 barrels per day in August to 19.71 million barrels per day, according to a Reuters survey, as disruptions to Saudi exports and restrictions on Iranian shipments offset planned increases by other members. The producer group has also cut its 2026 global demand growth forecast for a fifth consecutive month, to 380,000 barrels per day, even as the market’s attention shifts from demand concerns to whether existing supply can physically reach consumers.