NIGERIA’s 2026 budget could suffer a major setback as the global oil price dropped below the $64.85 per barrel projected as daily oil production of 1.84 million barrels.
Oil prices dropped on Wednesday, January 7, as the market reacted to United States President Donald Trump’s announcement that the US had secured a deal to import up to $2 billion in Venezuelan crude.
Reports from oilprice.com revealed that Brent crude dropped by 0.38 per cent to $60.56 a barrel by 17.00 West African Time, while US West Texas Intermediate crude fell by 1.17 per cent to $56.46 a barrel.
Earlier on Wednesday, Trump said Venezuela would turn over between 30 million and 50 million barrels of oil to the US.
Trump’s announcement followed his declaration that the US would take over the affairs of Venezuela until a political transition is achieved, after capturing Venezuelan President Nicolás Maduro and transporting him to New York.
Trump’s announcement would increase supplies to the US, the world’s largest oil consumer, media reports say.
Despite using a large chunk of its revenue to service debts, the current oil price threatens Nigeria’s budget implementation, as it is lower than the 2026 budget benchmark of $64.85 per barrel.
President Bola Tinubu presented the 2026 federal budget of N58.18 trillion to the National Assembly on December 19, 2025, with a ‘conservative’ crude oil benchmark of $64.85 per barrel.
“The 2026–2028 Medium‑Term Expenditure Framework and Fiscal Strategy Paper sets the parameters for this budget. Our projections are based on a conservative crude oil benchmark of US$64.85 per barrel; crude oil production of 1.84 million barrels per day; and an exchange rate of N1,400 to the US Dollar for the 2026 fiscal year,” he said.
The budget carries a deficit of N23.85 trillion, representing 4.28 per cent of gross domestic product (GDP).
More worrisome is the fact that the government has carried over 70 per cent of the capital component of the 2025 budget into 2026, citing unmet revenue amid concerns about massive borrowing.
This development has also increased worry about the government’s ability to fulfil a large chunk of its budget promises, amid dwindling oil revenue resources.
In December 2025, during the budget defence, lawmakers raised concerns over the Federal Government’s inability to meet revenue targets, with a shortfall of N30 trillion from a projected N40 trillion – a major cause of carrying over 70 per cent of the capital component of the 2025 budget, as was disclosed by the Minister of Finance and Coordinating Minister of the Economy, Wale Edun.
“The economic recovery and projections of 4.49 per cent by the Tinubu-led administration would most likely suffer a setback with the oil.
“Our major source of revenue earner is dropping below our benchmark. This is the time to work the talk of the economic diversification that the government has been talking about ,” said a public policy analyst, Kingsly Obiakor, while speaking with The ICIR on the development.
Harrison Edeh is a journalist with the International Centre for Investigative Reporting, always determined to drive advocacy for good governance through holding public officials and businesses accountable.