Nigeria's ambitious N58.18 trillion spending plan for 2026 is facing a severe threat from a geopolitical crisis thousands of miles away. The recent political upheaval in Venezuela, marked by a U.S. invasion and the capture of President Nicolás Maduro, is sending shockwaves through global oil markets that could punch a $10 billion hole in the Federal Government's revenue projections.
Venezuela's Return and the Global Oil Glut
Following the military intervention, U.S. President Donald Trump announced plans for American oil companies to invest billions in rebuilding Venezuela's crippled oil infrastructure. While a full recovery will take time, analysts warn that the eventual easing of sanctions could allow a flood of Venezuelan crude back into mainstream markets.
Before sanctions crippled its industry in 2019, Venezuela exported roughly 707 million barrels annually, primarily to the United States. By 2023-2024, exports had only partially recovered to between 250 and 350 million barrels. A full-scale rehabilitation, backed by U.S. capital, could add significant volumes to global supply, intensifying competition and driving prices downward.
Industry watchers now suggest that President Trump's stated target of $50 per barrel for crude is becoming a realistic, if alarming, possibility. This poses a direct danger to Nigeria's 2026 budget, which is built on a benchmark oil price of $64.85 per barrel and a production target of 1.84 million barrels per day.
Nigeria's Precarious Fiscal Position
The math is stark. Based on its benchmarks, Nigeria projected gross oil receipts of approximately $43.84 billion for 2026. However, with prices potentially plummeting towards $50, the revenue shortfall could reach $10 billion. The National Assembly, sensing the risk, has already proposed lowering the benchmark price to $60 per barrel.
This potential crisis comes when Nigeria has little fiscal buffer. Finance Minister Wale Edun disclosed a N30 trillion revenue shortfall in 2025. Debt servicing alone is consuming N15.52 trillion, and the projected fiscal deficit for 2026 stands at N23.85 trillion, or 4.28% of GDP.
Prof. Segun Ajibola, former Chairman of the Chartered Institute of Bankers of Nigeria, highlighted the immediate stress: "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... it will affect Nigeria’s projections for 2026."
Broader Economic Consequences and Expert Warnings
The fallout extends beyond the budget. The Naira, which gained ground in 2025, could face renewed downward pressure if crucial oil-derived dollar inflows shrink. This would complicate efforts to stabilise the foreign exchange market, especially with political spending for the 2027 elections likely to increase demand for dollars.
Experts are urging immediate caution and structural change. Petroleum economist Prof. Wunmi Iledare called the 1.84 million bpd production target "aspirational" and warned against "budgeting on best-case oil outcomes." Oil policy expert Dr. Kaase Gbakon cautioned that a de-risked Venezuela could divert vital investment capital away from Nigeria's own oil and gas sector.
Financial analyst Kalu Aja advocated for prudence, tweeting that Nigeria should be "preparing an austerity budget, not an optimistic one." There are also renewed calls to finally resolve domestic refining challenges to stop the economically damaging cycle of exporting crude only to import expensive refined products.
The consensus among stakeholders is clear: Nigeria must adopt more conservative budgeting, accelerate tax reforms to boost non-oil revenue, and enforce stricter spending discipline. As the country shops for buyers for its 2026 crude cargoes, the message from the Venezuela crisis is that relying on optimistic oil projections is a dangerous gamble with the nation's economic stability.
