KEY POINTS
- Nigerian crude trades around $71, still above the government’s 2026 budget benchmark of $64.85.
- Geopolitical risks near major shipping routes and nuclear talks are supporting prices.
- Rising global inventories and trade tensions could limit gains later in the year.
Nigeria’s flagship crude grade, Bonny Light, is trading around $71 per barrel, slightly down from about $72.30 earlier in the week.
Despite the dip, the price remains comfortably above the Federal Government’s 2026 budget benchmark of $64.85, providing a positive revenue outlook for Africa’s largest oil producer.
Known globally as a “light and sweet” crude, Nigerian oil is prized for its low sulfur content and high API gravity, qualities that make it cheaper and easier to refine into premium fuels such as petrol and diesel.
This quality advantage often helps Nigerian crude command competitive pricing even during volatile market cycles.
Geopolitical Tensions Support Oil Prices
Global oil prices have drawn support from rising geopolitical risks, particularly around the Red Sea and the Strait of Hormuz, a vital corridor through which roughly 20 million barrels of oil pass daily.
Military activity is increasing as the United States positions forces near the region ahead of renewed nuclear negotiations with Iran in Geneva. At the same time, Iranian naval drills in the strait have heightened fears of supply disruptions, pushing investors toward oil as a hedge against uncertainty.
While near-term geopolitical risk is supporting crude prices, forecasts suggest potential downward pressure in the months ahead. The US Energy Information Administration projects global oil inventories could rise by about 3.1 million barrels per day this year, as production growth is expected to outpace demand.
Such projections point toward a market that could shift from tight supply to a more balanced—or even oversupplied—state, which would normally cap price gains.
Oil markets are also reacting to renewed trade concerns. The U.S. administration has signaled plans for new tariffs, including a proposed 15% global levy, after a court ruling struck down earlier duties. Analysts warn that escalating trade tensions could slow global economic activity, potentially weakening energy demand.
Investors are now awaiting fresh inventory figures from the American Petroleum Institute, whose weekly data release is expected to influence short-term price direction.
