Nigerian crude oil last traded above $70 per barrel, outperforming the Federal Government’s 2026 budget benchmark of $64.85 amid rising geopolitical tensions. Bonny Light was reported at around $71 per barrel, slightly down from $72.3 on Monday.
Renowned for being “light and sweet,” Nigerian crude’s low sulfur content and high API gravity make it cheaper to refine into high-value products like diesel and gasoline.
Global oil markets are experiencing heightened volatility due to geopolitical tensions outside the Middle East. US military forces are mobilising near the Red Sea ahead of the third round of US-Iran nuclear talks in Geneva, raising the risk of supply disruptions. Iranian naval exercises in the Strait of Hormuz, a critical route for roughly 20 million barrels of oil daily, are adding to these concerns.
At the same time, the US Energy Information Administration (EIA) projects global oil inventories to rise by 3.1 million barrels per day in 2026, potentially leading to a more balanced or even oversupplied market later in the year. Trade uncertainties have also resurfaced after US signals of new national security tariffs, including a proposed 15% global levy, which could affect energy demand.
The Federal Government’s 2026 budget was conservatively based on $64.85 per barrel, with a production target of 1.84 million barrels per day (bpd). In January 2025, production averaged 1.48 million bpd, slightly below the OPEC+ target of 1.5 million bpd.
Nigeria has also introduced new crude grades, Cawthorne (API 36.4°), Utapate, and Obodo, to diversify its export portfolio. Meanwhile, the Dangote Refinery, with a capacity exceeding 650,000 bpd, has transformed the domestic fuel market, making Nigeria self-sufficient in Premium Motor Spirit (PMS/Petrol). The refinery currently supplies 60–65 million litres of petrol daily, exporting a surplus of 20 million litres.
Crude theft and pipeline vandalism, which cost Nigeria billions in 2025, have decreased for the first time in 16 years, thanks to new security task forces and community-based surveillance programs.
To attract fresh investments, the Federal Government launched a licensing round for 50 oil and gas blocks in January 2026, aiming to secure over $10 billion for developing untapped assets.
Amid these developments, the Nigerian oil sector is poised for stronger revenue generation, even as the market navigates the dual pressures of global supply growth and geopolitical risk.
