A new forecast by Citi projecting that Brent crude oil prices could decline to $60 per barrel by the end of 2026 has raised fresh concerns about Nigeria’s fiscal outlook, foreign exchange earnings, and overall macroeconomic stability.
The projection comes after Brent crude retreated sharply from a peak of about $115 per barrel recorded on May 1, 2026, to around $72 per barrel, as geopolitical tensions in the Middle East eased and fears of supply disruptions subsided.
For Nigeria, a further decline towards $60 per barrel would increase pressure on government finances at a time when the 2026 budget already carries a projected fiscal deficit of N23.85 trillion. Lower oil prices, combined with production challenges, could significantly reduce federally collected revenues and increase reliance on borrowing to finance government expenditure.
What the data is saying
Nigeria’s 2026 budget is benchmarked on an oil price assumption of $64.85 per barrel, meaning a sustained decline to $60 would place the budget under immediate pressure. Every dollar decline below the benchmark reduces the amount of oil revenue available to finance government spending, particularly if production volumes remain below target.
The challenge extends beyond prices. The Federal Government’s budget also assumes oil production of about 1.84 million barrels per day, a level Nigeria has consistently struggled to achieve in recent years due to crude theft, pipeline vandalism, operational constraints, and underinvestment. If both production volumes and oil prices underperform simultaneously, the impact on government revenue becomes significantly more severe.
Lower crude oil prices would also weaken Nigeria’s foreign exchange inflows. Crude oil remains the country’s largest source of export earnings and a major contributor to external reserves. When oil prices decline, the Central Bank receives fewer dollar inflows, reducing its capacity to support the foreign exchange market, build reserves, and stabilise the naira.
The forecast also raises concerns about Nigeria’s fiscal deficit. With the 2026 budget already projecting a N23.85 trillion financing gap, weaker oil revenues would likely force the government to depend more heavily on both domestic and external borrowing. Increased borrowing could further raise debt servicing costs, which already consume a significant share of government revenues.
In addition, lower oil prices could reduce the excess revenue that typically accumulates during periods of elevated crude prices. Earlier in the year, geopolitical tensions involving the Middle East temporarily pushed Brent crude above $100 per barrel, providing oil-exporting countries with additional revenue. As those tensions have eased, that pricing premium has largely disappeared, reducing the opportunity for Nigeria to strengthen its external reserves or improve fiscal buffers.
What you should know
Nigeria remains highly dependent on crude oil despite ongoing efforts to diversify government revenue. Oil exports account for the majority of the country’s foreign exchange earnings and continue to play a central role in financing the federal budget.
Although recent reforms—including exchange rate liberalisation, subsidy removal, and improved tax administration—have strengthened parts of the economy, government finances remain vulnerable to swings in global oil prices. This vulnerability becomes even more pronounced when oil production falls below budget assumptions.
If Brent crude were to decline towards $60 per barrel, Nigeria could face weaker fiscal revenues, slower reserve accumulation, increased borrowing requirements, and renewed pressure on the naira. Much will ultimately depend on whether the country can raise crude production closer to budget targets while maintaining stable global demand for oil during the remainder of the year.
