Rising geopolitical tensions in Venezuela and the possibility of a major shift in global oil supply could significantly undermine Nigeria’s ₦58.18 trillion 2026 budget, exposing the country to revenue shortfalls estimated at over $10 billion and placing fresh pressure on the naira.
Analysts warn that renewed oil production from Venezuela, following recent U.S. military action and political changes, could push crude prices lower at a time when Nigeria’s fiscal position remains fragile. With oil revenue forming the backbone of the federal government’s spending plan, weaker prices could severely stress budget assumptions.
Nigeria plans to generate about $40.6 billion in oil revenue in 2026, based on projected production of 1.84 million barrels per day and a benchmark price of $64.85 per barrel. However, the National Assembly has already proposed lowering the benchmark to $60, amid fears that prices could fall further to around $50 per barrel.
Should prices slide to that level, analysts estimate Nigeria could lose more than $10.2 billion in expected revenue, deepening borrowing needs and worsening fiscal pressures.
The concern intensified after U.S. President Donald Trump announced plans to ramp up Venezuelan oil production following the reported capture of President Nicolás Maduro. Trump said American oil companies would invest heavily in rebuilding Venezuela’s oil infrastructure, potentially returning millions of barrels to the global market.
Meanwhile, eight major oil producers—including Saudi Arabia, Russia, Iraq, the UAE and others—have reaffirmed their commitment to OPEC-backed market stability, even as global supply dynamics remain uncertain.
Experts warn that a faster-than-expected return of Venezuelan crude could weaken oil prices, reduce foreign exchange inflows and destabilise Nigeria’s currency. The naira, which gained ground in 2025, could come under renewed pressure if oil earnings decline.
The 2026 budget projects total spending of ₦58.18 trillion, comprising ₦15.52 trillion for debt servicing, ₦15.25 trillion for recurrent expenditure and ₦26.08 trillion for capital projects. The fiscal deficit stands at ₦23.85 trillion, or 4.28 per cent of GDP.
Nigeria’s ability to meet its oil production target remains uncertain, given persistent challenges including oil theft, pipeline vandalism, ageing infrastructure and underinvestment. Actual output has consistently fallen short of benchmarks in recent years.
If oil prices weaken further, Nigeria’s projected gross oil receipts could fall to about $33.6 billion, widening the funding gap and increasing reliance on borrowing.
Venezuela’s oil exports, which exceeded 700 million barrels annually before U.S. sanctions in 2019, collapsed to below 200 million barrels in subsequent years. While exports have partially recovered since 2022 through alternative trading routes, they remain far below pre-sanctions levels.
Stakeholders believe a shift in Venezuela’s sanctions status could eventually allow its oil to re-enter mainstream global markets, intensifying competition and increasing downward pressure on prices.
Economists caution that Nigeria may also face stiffer competition in key export markets such as the U.S., China and India. Increased U.S. demand for Venezuelan crude could reduce appetite for Nigerian grades, affecting both prices and volumes.
Former Chartered Institute of Bankers of Nigeria chairman, Prof. Segun Ajibola, warned that Nigeria’s oil assumptions are already under strain, adding that a supply-driven price war would further weaken projections. He urged the government to prioritise domestic refining and reduce dependence on crude exports.
Oil price weakness would also hurt Nigeria’s foreign exchange position, as crude sales remain the country’s primary source of FX inflows. Reduced dollar supply could complicate efforts to stabilise the currency, especially ahead of the 2027 general elections.
Experts also warned that improved investment conditions in Venezuela could divert capital away from Nigeria and other African producers at a time when Nigeria urgently needs fresh investment to halt production decline.
While Nigeria has begun implementing tax reforms aimed at boosting non-oil revenue, analysts doubt the measures will provide sufficient buffers in the short term. With debt servicing already consuming a large share of government spending, the country has limited capacity to absorb further shocks.
Stakeholders therefore urge more conservative budgeting, stronger non-oil revenue mobilisation and tighter spending discipline to prevent serious disruptions to the implementation of the 2026 budget.
