Nigerian crude oil last traded above $70 a barrel, higher than FG’s 2026 budget benchmark of $64.85 amid growing geopolitical risk.
Nigerian crude is popularly known for being “light and sweet.”
Its low sulfur content and high API gravity make Nigerian crude cheaper to refine into high-value products like diesel and gasoline.
Rising geopolitical risk premiums, particularly outside of the Middle East, have made oil one of the best-performing asset classes this year.
This is because US military forces are gathering in the area surrounding the Red Sea in preparation for the third round of US-Iran nuclear talks, which will take place in Geneva today.
Diplomatic talks are set to resume this week in Geneva amid increasing US political and military pressure on Tehran. The risk of supply disruption is heightened by ongoing Iranian naval exercises in the Strait of Hormuz, a vital route for the transportation of about 20 million barrels of oil daily.
Meanwhile, the market faces the potential for increased supply in the medium term. The US Energy Information Administration (EIA) expects global inventories to rise as production growth is projected to outpace consumption.
The agency forecasts an average increase of 3.1 million barrels per day in global stockpiles this year, surpassing expectations for 2025.
These projections suggest a market that could become more balanced or even oversupplied over the year.
Additionally, trade uncertainties have resurfaced after the US administration signaled plans to introduce new national security tariffs following a Supreme Court decision invalidating some previous levies. A proposed 15% global tariff has been mentioned, re-igniting concerns about global growth and energy demand.
Amid this mixed outlook, Nigerian oil’s pullback reflects a market torn between persistent supply-side geopolitical risks and growing questions about global demand. Attention is now focused on the release of the American Petroleum Institute (API) Weekly Crude Oil stock data later today, which could provide fresh direction for prices in the short term.
The Federal Government’s 2026 budget is based on a conservative crude price of $64.85 per barrel, with an ambitious daily production target of 1.84 million barrels. Production in January 2025 was around 1.48 million barrels per day (bpd), just below the OPEC+ target of 1.5 million bpd.
Nigeria launched the Cawthorne (API 36.4°) crude grade in February 2026, alongside new grades introduced in 2024 and 2025, Utapate and Obodo, respectively.
The Dangote Refinery, with a capacity of over 650,000 bpd in 2026, has created a new paradigm. Nigeria is now refining a larger share of its crude and aims to become self-sufficient in fuel rather than exporting all its crude and importing fuel.
This refinery is also the first in the world to reach this production level using a single train. During a recent NNPCL site visit, the refinery was seen at 661,000 bpd, even higher than its designed capacity. The refinery has made Nigeria self-sufficient in Premium Motor Spirit (PMS/Petrol).
Dangote is now supplying from 60 million to 65 million litres of petrol to the Nigerian market. The refinery is now exporting 20 million litres of surplus petrol to its borders, given Nigeria’s average daily consumption
Crude theft and pipeline vandalism cost Nigeria billions of dollars in revenue in 2025. However, the 2025/2026 period saw the first decrease in reported losses in 16 years, thanks to new security task forces and community-sourced surveillance monitoring of oil theft.
The federal government launched a new licensing round for 50 oil and gas blocks in January 2026, aimed at attracting over $10 billion in new investments to develop previously unexploited assets and intracontinental basins.
