Oil falls below $60, raising revenue risks for Nigeria’s 2026 budget

Global oil prices slid below $60 a barrel on Tuesday, hitting their lowest level since May, as signs of progress toward a possible Russia–Ukraine peace deal raised expectations of additional oil supply entering an already well-stocked market.

Brent crude dropped $1.11, or about 1.8 percent, to $59.45 a barrel by mid-morning London time, while U.S. West Texas Intermediate (WTI) fell by a similar margin to $55.71 a barrel.

Why it matters

For oil-dependent economies such as Nigeria, the price dip underscores growing risks to government revenues just as the country is struggling with high debt and unstable economy.

According to Nigeria’s new budget document, the government has to cover a massive N20.12 trillion shortfall (or “deficit”) for 2026. To close this gap, it plans to take out N17.89 trillion in new loans.

Tightened fiscal space

Analysts say markets are increasingly pricing in the possibility that sanctions on Russia could ease if negotiations to end the war in Ukraine continue to gain traction, potentially releasing more Russian oil into global markets.

“Brent has dropped this morning to below $60 per barrel for the first time in months, as the market assesses a potential peace deal resulting in additional Russian volumes becoming available and oversupplying the market further,” Janiv Shah, an analyst at Rystad Energy, told Reuters.

Optimism around diplomacy followed reports that the United States had offered NATO-style security guarantees for Ukraine, while European negotiators said talks had made progress on Monday. However, uncertainty remains high. Russia has signalled it is unwilling to make territorial concessions, with Deputy Foreign Minister Sergei Ryabkov saying Moscow would not compromise, according to state news agency TASS.

Beyond geopolitics, weak economic signals from China, the world’s largest oil importer, are adding to bearish sentiment. Official data released on Monday showed China’s factory output growth slowed to a 15-month low, while retail sales expanded at their weakest pace since December 2022, during the COVID-19 period.

Some supply-side risks remain, including the United States’ seizure of an oil tanker off Venezuela last week. However, traders say the impact has been limited by rising floating storage and increased Chinese purchases of Venezuelan crude ahead of potential sanctions.

For African oil producers, sustained prices below $60 could tighten fiscal space, complicate subsidy reforms and weigh on foreign exchange inflows, particularly in countries still grappling with declining production and infrastructure constraints.