Global oil prices tumbled on Wednesday, January 21, 2026, dipping below levels critical to Nigeria’s fiscal stability. Brent crude fell toward $64 per barrel, officially sliding under the $64.85 benchmark set in the 2026 Appropriation Bill.
This price decline comes at a vulnerable moment for the federal government, which just weeks ago presented a N58.18 trillion budget heavily dependent on oil revenue. With the market now in a bearish phase, analysts warn that the N23.85 trillion deficit projected for the year could widen significantly if prices do not rebound.
The downward pressure is being driven by a “relentless spigot” of supply from non-OPEC producers, particularly the United States. In his address at the World Economic Forum in Davos on Wednesday, IEA Executive Director Fatih Birol warned that the global market is entering a period of sustained oversupply that could last three to four years.
The IEA’s January 2026 report, released today, forecasts a substantial surplus of 3.69 million barrels per day for the year. This surplus is being aggravated by the potential return of Venezuelan crude to the market and a 10% tariff threat from the US administration on European goods, which has dampened global risk appetite.
Nigeria’s fiscal framework is further complicated by a legislative split. While the House of Representatives retained the $64.85 benchmark, the Senate had previously voted to slash it to a more conservative $60 per barrel to cushion against such price shocks.
If prices remain at their current levels, the government may be forced to choose between massive new borrowings or significant cuts to its N26 trillion capital expenditure program. Major infrastructure projects like the Lagos-Ibadan Expressway and the Abuja-Kano Road rely on these oil receipts to maintain steady funding cycles throughout the fiscal year.
The situation is exacerbated by Nigeria’s persistent struggle to meet its production target of 1.84 million barrels per day. Despite renewed security efforts in the Niger Delta, underinvestment and aging infrastructure have kept actual output closer to 1.5 million barrels per day in recent months.
As the National Assembly begins detailed scrutiny of the 2026 budget, fiscal experts argue that the absence of a “Plan B” or stabilization fund leaves the economy walking a narrow path between optimistic growth targets and the harsh reality of a volatile global energy market.
