Nigeria may be on course for a significant boost in oil earnings as international crude oil prices surged above the $100 per barrel mark, raising hopes of improved government revenue despite the country’s persistent fiscal challenges.
Brent crude, the international oil benchmark, climbed to $100.69 per barrel on Thursday, the first time it has traded above the $100 threshold in nearly two months, as escalating attacks on commercial shipping in the Red Sea heightened fears of a widening supply crisis in the Middle East.
The latest rally places Brent $35.84 above Nigeria’s 2026 budget oil benchmark of $64.85 per barrel, potentially providing the Federal Government with additional revenue if the country sustains its projected crude oil production.
Nigeria’s 2026 Appropriation Act is based on an oil price benchmark of $64.85 per barrel and an ambitious daily crude oil production target of 1.84 million barrels. With Brent now trading at more than $100 per barrel, analysts say the country stands to benefit from higher oil export receipts, increased foreign exchange earnings and stronger government revenues.
As of mid-morning on Thursday, front-month Brent for September delivery was trading at $100.69 per barrel, after touching an intraday high of $101.01, representing a gain of more than seven per cent in a single trading session. U.S. West Texas Intermediate (WTI) crude also recorded sharp gains as investors priced in the growing risk of prolonged supply disruptions.
The fresh rally was sparked by claims from Yemen’s Houthi rebels that they had attacked two Saudi oil tankers in the strategic Bab el-Mandeb Strait after announcing a naval blockade of Saudi oil exports earlier in the week. The attacks reportedly forced several commercial vessels to reroute or delay passage through the vital shipping corridor, increasing concerns over the security of global energy supplies.
The Bab el-Mandeb Strait serves as a critical gateway linking the Red Sea to the Gulf of Aden and the Indian Ocean. The latest attacks have compounded fears over the Strait of Hormuz, another strategic maritime chokepoint through which a substantial portion of the world’s crude oil exports passes.
Market analysts noted that the latest surge in prices reflects growing concerns that the conflict is no longer confined to the Strait of Hormuz but has spread to another critical shipping route, threatening global energy supply chains.
The bullish momentum has also been supported by supply disruptions in other producing regions. Kazakhstan has reportedly begun reducing oil production after drone attacks disrupted tanker loading operations at the Caspian Pipeline Consortium terminal on the Black Sea. In addition, Indian state-owned refiners have suspended crude oil purchases from Iraq because of shipping risks through Hormuz, while Russian fuel exports remain constrained following months of Ukrainian drone attacks on refinery infrastructure.
The tightening physical oil market has further strengthened bullish sentiment. Governments across the world have already released hundreds of millions of barrels from their strategic petroleum reserves since the Middle East conflict escalated. Commercial oil inventories have also declined significantly, while China has reduced imports by relying on stockpiles accumulated before the crisis, leaving global supply buffers increasingly depleted.
Brent’s return to triple-digit territory marks a sharp reversal from expectations only weeks ago that diplomatic efforts between the United States and Iran would ease tensions and restore stability to Middle East oil exports. Instead, the conflict has intensified, extending from the Strait of Hormuz to the Red Sea and placing two of the world’s most important oil shipping routes under simultaneous threat.
For Nigeria, the sustained increase in crude oil prices could provide much-needed fiscal relief, especially as the country grapples with revenue shortfalls, rising debt obligations and growing expenditure demands.
However, industry observers caution that higher oil prices alone will not automatically translate into increased government earnings. Nigeria must sustain crude oil production at or above the budget benchmark of 1.84 million barrels per day, while tackling crude oil theft, pipeline vandalism and operational challenges that have continued to limit output.
