Nigeria’s Crude oil price trades above benchmark, easing fiscal pressure

By: ThinkBusiness Africa

Nigeria’s fiscal outlook received a significant boost this week as the price of its premium crude oil blend, Bonny Light, surged to $78.62 per barrel, comfortably trading above the Federal Government’s $75 per barrel benchmark set for the 2025 national budget.

This development provides a much-needed financial buffer,creating an immediate revenue surplus that can help fund the N54.99 trillion budget and potentially reduce the nation’s rising deficit trajectory; after experiencing a significant price dip in the second quarter of this year.

The latest trading figures show Nigeria’s crude outperforming key global indices. While the international benchmarks Brent and West Texas Intermediate (WTI) hover around $65 and $60 per barrel respectively, Bonny Light is currently commanding a high premium. Bonny Light (Nigeria) $78.62

April to September Bonny light crude faced significant downward pressure due to the decision by OPEC+ to gradually increase production and unwind 137,000 barrels per day into the market as voluntary cuts created a market uncertainty about oversupply.

Weakening global demand forecasts, driven by trade tensions and economic slowdowns in major consumers like China, pushed prices lower. The price dropped as low as $64.83 per barrel in May and averaged around $70.20 per barrel in September.

Traders attribute the resilience in the price of Bonny Light to a combination of declining global inventories and steady, high demand from Asian refiners for premium, low-sulphur grades.

Every dollar the crude price trades above the $75 benchmark translates directly into higher foreign exchange earnings for the Federation Account, offering a crucial lifeline to Nigeria’s dollar-constrained economy.

The higher-than-expected revenue stream can help mitigate the projected N13 trillion budget deficit and reduce the need for excessive domestic or external borrowing to finance infrastructural and social programs.

Improved oil revenue generally supports the Naira’s stability by boosting foreign reserves and strengthening the government’s capacity to meet its obligations. Crude oil sales accounts for over 80% of the West African economy foreign exchange.

Despite the favorable price, analysts caution that the full benefits of the surge will only be realized if Nigeria can consistently meet its production targets.

The 2025 budget is hinged not only on a $75 price but also on a production target of 2.06 million barrels per day (mbpd) (including condensates).

Recent data from September 2025 showed Nigeria’s combined crude and condensate production at approximately 1.58 million bpd, which is significantly below the budget target. Nigeria’s  peak oil production this year was 1.8 million bpd in January.

Nigeria’s current OPEC+ crude oil quota is set at 1.5 mbpd until the end of 2026. While the country has recently shown improved compliance, hitting around 96% of the quota in August 2025, security and infrastructure issues continue to hamper its ability to reach its national capacity target of over 2.0 mbpd.

Senator Heineken Lokpobir, the Minister of State for Petroleum Resources, has reiterated the government’s commitment to seeking an upward revision of the OPEC+ quota and intensifying efforts to combat crude oil theft and pipeline vandalism, which remain the main inhibitors to stable output.