Nigeria's oil gains are temporary; save windfall before downturn

Nigeria’s crude output rose to about 1.53 million barrels a day in May, a fifteen‑month high and the first sustained level above its OPEC quota in years. The gain came not from new investment but from a calmer Niger Delta that reduced pipeline attacks and crude theft, allowing shut‑in wells to restart. The 2026 budget was built on a conservative $60‑per‑barrel benchmark, well below the $64.85 initially proposed, giving the government fiscal headroom as Brent hovered above that level. A further boost came from the Iran‑Israel conflict, which pushed Brent above $100 for months; that geopolitical premium is now unwinding as the Strait of Hormuz reopens. Meanwhile, the Dangote refinery is finally drawing more of its feedstock domestically, taking seven crude cargoes a month from NNPC instead of five, but each barrel kept at home is a barrel not sold abroad, reducing Nigeria’s gains from any price rise. OPEC’s cohesion is weakening after the UAE’s exit; Saudi Arabia alone is trying to defend prices, and a looser cartel could push output higher, driving prices down. The country’s Excess Crude Account holds just $535,823—far below the billions once saved—leaving no buffer for a downturn. Analysts urge that, while Brent stays above $60, the windfall be automatically routed into a legally protected stabilization fund to build resilience before the inevitable downturn.

SOURCE: https://nairametrics.com/2026/06/30/nigerias-oil-windfall-has-an-expiry-date/