Nigeria’s 2026 budget may come under pressure following the recent United States strike on Venezuela, as the development continues to affect crude oil prices in the international market.
Oil prices extended their decline on Tuesday, with Brent crude falling by 0.38 per cent to $60.56 per barrel, while United States West Texas Intermediate dropped by 1.17 per cent to $56.46 per barrel. The slide followed President Donald Trump’s announcement that the US had secured a deal to import up to $2 billion worth of Venezuelan crude.
Trump also disclosed that Venezuela would supply between 30 million and 50 million barrels of oil to the United States within two months.
Nigeria’s proposed 2026 federal budget of N58.18 trillion is based on a crude oil benchmark of $64.85 per barrel. Analysts warn that sustained price declines could negatively affect government revenue projections.
Further heightening concerns, US Energy Secretary Chris Wright reaffirmed Washington’s intention to take long-term control of Venezuela’s oil industry, including supervision of crude sales and revenues, “indefinitely.”
Under the proposed arrangement, the United States would sell Venezuelan crude directly on the global market, potentially worsening the current supply glut.
Oil and gas consultant Mayowa Sodipo warned that increased US involvement in Venezuelan oil could hurt Nigeria’s revenue outlook, noting that the United States has historically been one of Nigeria’s largest crude buyers.
He said the gains recorded by the naira could also be threatened, as oil remains Nigeria’s main source of foreign exchange.
“Our forex may suffer if the price decline continues; it means reduced Forex inflow for the country, including affecting our external reserves, and this will put more pressure on the naira,” Sodipo said.
He added that prolonged low oil prices could affect government projects, stating that funding challenges may arise if prices remain weak.
Former Chairman of the Chartered Institute of Bankers of Nigeria, Prof Segun Ajibola, shared similar concerns, warning that reduced US demand could affect Nigeria’s export volumes and pricing.
Ajibola said, “At the current price of about $60.8 per barrel compared with Tinubu’s proposed $64.85, the situation is already becoming stressed. If a price war ensues, as could be triggered by increased supply from Venezuela, it will affect Nigeria’s projections for 2026.”
However, economist and Chief Executive Officer of the Centre for the Promotion of Private Enterprise, Dr Muda Yusuf, dismissed fears of an immediate impact, arguing that Venezuela’s current oil output is too small to influence global prices.
He explained that Venezuela produces less than one per cent of global oil supply due to years of underinvestment, sanctions, inefficiencies and institutional collapse.
According to Yusuf, recent developments, including Maduro’s capture, did not damage oil infrastructure, meaning output is unlikely to change in the short term.
He added that the global oil market is already experiencing a supply glut, which would cushion any marginal disruptions from Venezuela.
“Venezuela’s current oil output is extremely low, accounting for less than one per cent of global oil production,” Yusuf said.
He noted, however, that Venezuela remains strategically important in the long term due to its vast reserves, estimated at 18 per cent of global proven oil reserves.
“If the current political developments do not escalate into prolonged instability, and if Donald Trump follows through on indications that American oil companies could re-enter the Venezuelan oil sector, the country’s oil output could gradually recover,” Yusuf said.
He stressed that any recovery would take time, as rebuilding production capacity would require major investment, regulatory clarity and improved security.
Yusuf concluded that while Venezuela’s political situation is geopolitically significant, it poses no immediate threat to global oil prices. Any meaningful impact, he said, would only emerge in the medium to long term.
Meanwhile, OPEC+ has maintained steady output following its January 4 meeting, reinforcing expectations that 2026 could be marked by oversupply. With inventories stable and alternative supply available, traders remain largely unfazed.
Still, analysts caution that markets often underestimate geopolitical risks. Trump’s broader threats involving other countries have introduced uncertainty that could quickly alter market sentiment if tensions escalate.
