Nigeria’s 2026 budget may face significant pressure following a new forecast by global financial giant Citigroup (Citi), which predicts that Brent crude oil prices could decline to $60 per barrel before the end of the year. The projection raises concerns for Africa’s largest oil producer, whose economic stability and government revenues remain heavily dependent on crude exports. With Brent currently trading around $72 per barrel, analysts warn that a further decline could weaken Nigeria’s fiscal position and disrupt key government spending plans.
The Federal Government based its 2026 budget on an oil benchmark of $64.85 per barrel and an ambitious production target of 1.84 million barrels per day. However, Nigeria has historically struggled to consistently meet such production levels due to operational challenges, oil theft, and infrastructure constraints. If crude prices fall below the budget benchmark while production remains below target, the country could experience a substantial revenue shortfall, putting additional strain on public finances.
A drop in oil earnings would also affect Nigeria’s foreign exchange inflows and limit its ability to strengthen external reserves. Experts note that the country’s already sizeable budget deficit of N23.85 trillion may require increased borrowing from both domestic and international markets. This could further raise debt servicing costs at a time when the government is seeking to balance economic reforms with growing demands for infrastructure development and social spending.
The outlook for global oil prices has shifted considerably in recent months. Earlier in the year, geopolitical tensions involving Iran and disruptions around the Strait of Hormuz pushed crude prices above $80 per barrel. However, the restoration of normal shipping activities and a ceasefire agreement have eased market concerns. Citi analysts, led by Francesco Martoccia, said oil market fundamentals are once again taking center stage, citing weaker demand from China, rising global supply, and softer physical crude markets as factors likely to push prices lower.
Adding to the bearish sentiment, major investment banks including Goldman Sachs and Morgan Stanley have also revised their oil forecasts downward, warning of a potential supply glut in the global market. Citi expects Brent crude to trade between $60 and $65 per barrel by year-end, a scenario that could create fresh economic challenges for Nigeria. As oil remains the backbone of government revenue and foreign exchange earnings, policymakers may need to prepare contingency measures to cushion the impact of a prolonged decline in crude prices.
source: nairametrics
