Nigerian crude oil last traded above $70 per barrel, remaining higher than the Federal Government’s 2026 budget benchmark of $64.85, amid rising geopolitical tensions in the global oil market.
Latest market data show Bonny Light trading at about $71 per barrel, down 0.7 per cent from $72.3 recorded on Monday. Nigerian crude is widely regarded as “light and sweet,” a reference to its low sulphur content and high API gravity, which make it cheaper to refine into high-value products such as diesel and gasoline.
Oil prices have been supported this year by rising geopolitical risk premiums, particularly outside the Middle East. Tensions have increased following reports that United States military forces are gathering around the Red Sea ahead of a third round of US–Iran nuclear talks scheduled to hold in Geneva. The risk of supply disruption has also been heightened by ongoing Iranian naval exercises in the Strait of Hormuz, a critical route through which about 20 million barrels of oil are transported daily.
However, the market faces the prospect of increased supply in the medium term. The U.S. Energy Information Administration has projected that global oil inventories will rise as production growth is expected to outpace consumption. The agency forecasts an average increase of 3.1 million barrels per day in global stockpiles this year, a trend that could leave the market more balanced or potentially oversupplied.
Trade uncertainties have also resurfaced after the US administration signalled plans to introduce new national security tariffs following a Supreme Court ruling that invalidated some previous levies. A proposed 15 per cent global tariff has revived concerns about global economic growth and future energy demand.
Against this backdrop, Nigerian crude’s recent pullback reflects a market weighed between persistent supply-side geopolitical risks and mounting concerns over demand. Market attention is now on the release of the American Petroleum Institute weekly crude oil stock data, which may provide near-term direction for prices.
Meanwhile, Nigeria’s oil sector outlook has shown signs of improvement. The 2026 budget is anchored on a conservative oil price of $64.85 per barrel and a daily production target of 1.84 million barrels. Output in January 2025 stood at about 1.48 million barrels per day, slightly below the OPEC+ target of 1.5 million barrels per day.
Nigeria also introduced the Cawthorne crude grade in February 2026, adding to new grades launched in 2024 and 2025, namely Utapate and Obodo. The expansion of domestic refining capacity has further reshaped the industry, driven largely by the Dangote Refinery, which has a capacity of over 650,000 barrels per day. The refinery has enabled Nigeria to refine a larger share of its crude domestically and has helped the country achieve self-sufficiency in Premium Motor Spirit.
Crude oil theft and pipeline vandalism continued to weigh on revenue in 2025, though official reports indicate the first decline in losses in 16 years during the 2025/2026 period, attributed to enhanced security measures and community-based surveillance. In addition, the Federal Government launched a new licensing round for 50 oil and gas blocks in January 2026, targeting over $10 billion in fresh investments to develop untapped assets and inland basins.
