Advocates fiscal prudence, disciplined spending and accelerated non-oil revenue growth
Dr. Wisdom Enangis a senior analyst and policy consultant operating at the intersection of energy, fiscal policy, and economic strategy. He is a UK-trained Chartered Engineer and Fellow of both the Nigerian Society of Engineers and the Nigerian Institute of Safety Engineers, who advises governments, regulators, and multinational organisations on market risk, revenue sustainability, and macroeconomic planning. He provides thought leadership on conservative budgeting, structural economic reforms, and the management of global market shocks, helping shape resilient policies for resource-dependent and emerging economies.
Unfolding geopolitical developments in Venezuela now pose a material risk to Nigeria’s N58.18 trillion 2026 Federal Government budget, primarily through sustained downward pressure on global crude oil prices.
This position comes against the backdrop of shifting global oil supply dynamics that are forcing a reassessment of fiscal projections across oil-dependent economies, with Nigeria particularly exposed to downside risk.
From an industry and policy standpoint, the Venezuelan crisis has triggered a recalibration of market expectations, placing Nigeria’s core budget assumptions under heightened scrutiny at a time when oil market sentiment is steadily turning cautious rather than optimistic.
President Donald Trump’s long-stated preference for crude oil prices around $50 per barrel can no longer be dismissed as rhetorical posturing. It is increasingly manifesting as an emerging market reality, shaped by evolving United States foreign policy priorities and a broader supply-side reconfiguration within the global oil market.
Within this context, Nigeria finds itself budgeting on a best-case oil scenario in a market that is steadily pricing in downside risk.
Under the current fiscal framework, the Federal Government expects to generate approximately $40.6 billion in oil revenue in 2026 by producing about 673 million barrels of crude, equivalent to 1.84 million barrels per day, at a benchmark price of $64.85 per barrel, although the National Assembly has proposed a downward revision of that benchmark to $60 per barrel.
The vulnerability of this assumption becomes evident if oil prices retreat to $50 per barrel, a scenario that could translate into a revenue shortfall of roughly $10.24 billion. Such a shock would significantly strain fiscal execution and widen already existing funding gaps.
Oil price sensitivity is no longer theoretical. Each dollar decline below the benchmark now carries immediate and tangible fiscal consequences.
Recent reports of a United States-backed military intervention in Venezuela, coupled with the capture of President Nicolas Maduro and subsequent public signals from President Trump regarding investment in reviving Venezuelan oil production, have materially altered global supply expectations. These developments point clearly to the potential return of substantial Venezuelan crude volumes to the international market.
At the same time, eight major producers, namely Saudi Arabia, Russia, Iraq, the United Arab Emirates, Kuwait, Kazakhstan, Algeria and Oman, have reaffirmed their commitment to OPEC-backed market stability, citing a steady yet fragile global economic outlook.
Even so, caution remains warranted. The re-entry of Venezuelan oil could tilt the balance in an already delicate market, particularly if global demand growth continues to underperform. OPEC can manage volatility, but it cannot repeal energy economics.
Oil revenue remains a central pillar of Nigeria’s N58.18 trillion spending plan, underscoring growing concerns that a faster-than-expected rehabilitation of Venezuela’s oil sector could weaken Nigeria’s fiscal projections, reduce foreign exchange inflows and deepen existing revenue constraints.
Although the $64.85 per barrel benchmark is optimistic and not entirely unattainable, prudence demands more conservative assumptions in a global market increasingly shaped by geopolitics and supply management rather than demand exuberance.
These concerns are compounded by Nigeria’s existing fiscal fragility. In 2025, the Federal Government recorded a revenue shortfall of nearly N30 trillion, exposing a persistent disconnect between budget expectations and actual inflows.
Should oil receipts weaken, renewed pressure on the naira would be inevitable. Exchange rates do not strengthen on sentiment. They rely on dollars, and oil still supplies the bulk of those dollars.
Under the 2026 budget framework, total expenditure is projected at N58.18 trillion, comprising N15.52 trillion for debt servicing, N15.25 trillion for non-debt recurrent expenditure and N26.08 trillion allocated to capital spending.
A projected fiscal deficit of N23.85 trillion, equivalent to about 4.28% of GDP, leaves little room to absorb adverse oil price shocks, particularly given that oil production assumptions remain ambitious.
Production performance itself remains a structural concern. Chronic under-investment, oil theft, pipeline vandalism, operational inefficiencies and declining output from mature fields have consistently undermined Nigeria’s ability to meet its targets. Against this backdrop, the 1.84 million barrels per day production assumption remains aspirational even before accounting for external shocks.
If oil prices slide to $59 per barrel, projected gross revenue would fall to roughly $33.6 billion, intensifying borrowing pressures and further constraining budget execution.
To fully appreciate the Venezuelan risk, historical context is instructive. Venezuela’s production collapse over the past decade was driven less by resource scarcity than by sanctions-related compliance risks that forced the withdrawal of traders, insurers, banks and shipping firms.
Before 2019, Venezuela exported over 700 million barrels annually. Sanctions, not reserves, dismantled that system.
Any easing of sanctions and restoration of legal certainty could allow Venezuelan crude to re-enter mainstream global markets, expanding supply and exerting renewed downward pressure on prices.
For Nigeria, the principal risk is not immediate displacement but sustained price compression in an increasingly competitive market.
From a pricing outlook standpoint, crude oil prices are likely to hover around $50 per barrel in 2026, particularly if Venezuelan exports recover faster than anticipated and global economic growth remains subdued.
Nigeria and Venezuela sell into similar markets. That reality makes them competitors, not spectators.
Nigeria’s continued reliance on exporting crude while importing refined products remains economically inefficient.
Addressing longstanding refinery challenges, supporting private refining capacity and diverting more crude into domestic processing must therefore become urgent national priorities.
Lower oil prices would weaken Nigeria’s foreign exchange position, reduce dollar inflows and complicate efforts to stabilise the naira, especially ahead of the 2027 general elections when fiscal and foreign exchange pressures traditionally intensify.
A rehabilitated Venezuelan oil sector also risks diverting global investment capital away from Nigeria and other African producers at a time when fresh capital is urgently required to arrest domestic production decline. If Venezuela is de-risked, capital will flow. Capital is not sentimental.
While Nigeria’s tax reform programme, launched in January 2026, is a step in the right direction, structural reforms take time to yield results and cannot immediately offset oil revenue shocks, particularly in an environment where debt servicing already consumes over a quarter of total expenditure.
The conclusion is therefore unavoidable. Without more conservative budgeting, stronger non-oil revenue mobilisation and tighter spending discipline, Nigeria’s N58.18 trillion 2026 budget faces significant implementation challenges in an increasingly uncertain global oil market.
