Nigeria faces revenue gap as Citi sees Brent oil dropping to $60 by year-end
Citi analysts warn Brent crude could slide to $60 per barrel by the end of 2026, down from about $72 today and far below the May peak of $115. Nigeria's 2026 budget assumed an oil price of $64.85 per barrel, a level now looking unsafe given the forecast. Even if prices hold near current levels, the country has historically struggled to sustain its target output of 1.84 million barrels per day, so lower volumes combined with weaker prices will further cut foreign-exchange earnings. The removal of Hormuz-related risk premiums, as shipping normalizes and Chinese demand stays weak, has removed a source of extra revenue that previously helped build reserves. With a projected N23.85 trillion budget deficit, the government will lean heavily on foreign and domestic borrowing, pushing up debt-service costs and likely forcing cuts to public spending. Earlier in the year, geopolitical tensions at the Strait of Hormuz had pushed prices up, but the cease-fire between the US and Iran has restored normal maritime flows, eliminating those premiums. Global oversupply and softer Chinese demand are now driving the downward trend, with Brent having lost about 30 percent of its value during the second quarter. This combination of lower income and higher borrowing costs threatens to widen the fiscal gap and squeeze naira liquidity. For households and businesses, this outlook suggests reviewing exposure to naira volatility, considering savings in harder currencies, and watching for possible cuts in fuel subsidies or public projects.