Oil prices continued to decline following the United States’ weekend actions in Venezuela, sparking concerns about potential impacts on Nigeria’s 2026 federal budget. Experts remain divided over how the developments will affect the country’s revenue and broader economy.
On Monday, Brent crude fell by 0.38 per cent to $60.56 per barrel, while US West Texas Intermediate crude declined by 1.17 per cent to $56.46 per barrel. The market reacted to President Donald Trump’s announcement that the United States had secured a deal to import up to $2 billion in Venezuelan crude. Trump also stated that Venezuela would deliver between 30 million and 50 million barrels of oil to the United States within two months.
Nigeria’s 2026 federal budget, valued at N58.18 trillion, is based on a conservative crude oil benchmark of $64.85 per barrel. Analysts warn that if oil prices continue to decline, the country’s revenue projections may be negatively affected.
US Energy Secretary Chris Wright reinforced Trump’s plans for Venezuela’s oil, confirming that the United States intends to exercise long term oversight of Venezuela’s oil industry, including crude sales and revenues. The plan involves Washington selling Venezuelan oil directly on global markets, potentially adding to the existing global supply glut and further affecting oil prices.
Mayowa Sodipo, an oil and gas consultant, said the continued US involvement in Venezuelan oil could directly threaten Nigeria’s revenue projections for 2026. He explained that the United States has historically been one of the largest buyers of Nigerian crude, and a reduction in demand could impact foreign exchange inflows. “Our foreign exchange may suffer if the price decline continues. Reduced inflow will affect our external reserves and put more pressure on the naira,” Sodipo said. He also noted that government projects dependent on oil revenue could face funding challenges, further affecting economic growth.
Former chairman of the Chartered Institute of Bankers of Nigeria, Professor Segun Ajibola, echoed these concerns, emphasizing that any reduction in US demand could have a knock-on effect on Nigeria’s export volumes and earnings. “At the current price of about $60.8 per barrel, compared with the $64.85 benchmark in President Tinubu’s budget, the situation is already becoming stressed. If a price war develops, potentially triggered by increased Venezuelan supply, it will further challenge Nigeria’s projections for 2026,” he said.
Conversely, Dr Muda Yusuf, economist and Chief Executive Officer of the Centre for the Promotion of Private Enterprise, argued that the Venezuelan situation is unlikely to significantly affect global oil prices in the short term. He highlighted Venezuela’s extremely limited oil production, which accounts for less than one per cent of global output, and noted that years of underinvestment, operational inefficiencies, sanctions, and institutional collapse have weakened the country’s oil sector.
“Recent political developments, including the attack and the capture of Maduro, did not damage Venezuela’s production infrastructure. Oil output is expected to remain broadly unchanged in the short term,” Yusuf said. He added that the current global oil market is already experiencing a supply glut, which can absorb any marginal shocks from Venezuela.
However, Yusuf acknowledged Venezuela’s long term strategic significance due to its vast proven reserves, which constitute about 18 per cent of global oil reserves. He explained that any meaningful recovery in output would require substantial capital investment, technical expertise, and regulatory stability, meaning that significant supply increases are likely to occur only in the medium to long term.
OPEC+ also appears to be preparing for potential market volatility. In its January 4 meeting, the organization agreed to maintain steady output despite internal tensions, signaling expectations of oversupply in 2026. With inventories at comfortable levels and alternative barrels available, traders see limited immediate reason for concern.
Despite these mitigating factors, markets remain sensitive to geopolitical risks. President Trump’s threats not only toward Venezuela but also involving Colombia, Mexico, and Greenland introduce a level of headline risk that is difficult to model. History suggests that while investors often remain calm in the short term, geopolitical tensions can trigger sudden market reactions and price volatility.
Analysts continue to monitor the situation closely, warning that even minor developments in Venezuela or US foreign policy could have ripple effects on global oil prices and, consequently, on Nigeria’s revenue projections and economic stability.
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