Over the past six months, Nigeria has reportedly accumulated billions of Naira in oil revenue windfalls, a direct consequence of the protracted US-Iran conflict disrupting the global crude oil market and driving up prices. Although an exact public record of the windfall amount remains elusive, an analysis conducted by Daily Trust suggests that Nigeria may have grossed approximately N5 trillion since the hostilities between the United States and Iran began in late February 2026.
The conflict's peak, exacerbated by the reported killing of Iranian Supreme Leader Ayatollah Khamenei in a joint US-Israeli airstrike, saw Brent crude, the international benchmark, trading above $115 per barrel in April as supply chain disruptions worsened. While elevated crude oil prices typically signify positive news for oil-producing nations such as Nigeria, strengthening government revenues and foreign exchange earnings, they simultaneously lead to increased costs for fuel, transportation, and food for households.
Estimated Windfall Over Six Months
The initial N58.47 trillion 2026 budget was predicated on a relatively conservative crude oil benchmark of $64.85 per barrel, with a projected oil production of 1.84 million barrels per day. This budget was subsequently revised upwards to N67.7 trillion. In April, following the budget's approval, Senator Solomon Adeola Olamilekan, Chairman of the Senate Committee on Appropriations, announced an increase in the crude benchmark to $75 per barrel. Given that international crude prices have consistently surpassed this revised benchmark, Nigeria has accrued additional earnings.
In early March, crude prices experienced a significant surge, with Brent Crude immediately jumping 10% to $82. By mid-March, prices soared to nearly $120 after the Strait of Hormuz, a crucial shipping route responsible for one-fifth of global fuel supply, was closed. From its peak of $117 in April, prices moderated to an average of $107 in May. By June, they eased to $85 following a Memorandum of Understanding signed by both the US and Iran. Prices returned to their pre-war low of $72 in late June, but renewed tensions and escalation subsequently pushed them back above $100 per barrel.
At an average price of $97 per barrel over the six-month period, Nigeria would have earned an extra $22 per barrel above its $75 projection. During this review period, crude oil and condensate production averaged around 1.6 million barrels per day, falling short of the 2026 budget benchmark. Data from the Nigerian Upstream Petroleum Regulatory Commission (NUPRC) indicates that the country produced an average of 1.68 million barrels per day (mbpd) of crude oil and condensates in August, a slight increase from 1.67mbpd in July.
In July, combined crude and condensate production was 1.67 million barrels per day, comprising 1.505 million barrels of crude and 0.17 million barrels of condensate. The NUPRC attributed this monthly decline partly to operational challenges at the Erha and Akpo fields. According to NUPRC figures, Nigeria’s crude oil production averaged 1.56 million barrels per day in June, 1.70mbpd in May 2026, 1.66 mbpd in April, and 1.56 mbpd in March 2026.
Based on an average production of 1.6mbpd, Nigeria produced 48 million barrels per month, equating to 288 million barrels over six months, as opposed to the projected 324 million barrels at 1.8mbpd. In financial terms, it is estimated that Nigeria grossed $27.9 billion at an average of $97 per barrel and 288 million barrels, compared to $24.3 billion from the projected $75 per barrel and 324 million barrels. This leaves an excess of $3.6 billion, approximately N4.78 trillion.
This analysis does not account for the existing crude swap arrangement, officially known as the direct sale, direct purchase (DSDP) scheme, introduced by the Nigerian National Petroleum Company Limited (NNPCL). Under this programme, the Nigerian government secured loans to be repaid through crude oil sales, meaning future sales are deducted as a first-line charge from oil production. It is estimated that around 300,000 barrels of crude oil have been allocated to this arrangement, though independent confirmation from the NNPCL was unavailable at the time of reporting.
Expert Perspectives on the Windfall
Experts contend that the escalating crude prices present a significant opportunity for Nigeria to bolster its revenue and establish social safety nets for citizens grappling with high energy prices, increased fuel costs, and the overall cost of living, all exacerbated by the current global disruptions. They highlight that Nigeria could have realised even greater gains if it had achieved its projected 1.8 million barrels-per-day oil production target.
Repeated attempts to obtain comments from the Nigerian National Petroleum Company Limited (NNPCL) and the Ministry of Finance were unsuccessful. Correspondence sent to their spokespersons also went unanswered.
Despite the rising prices, there has been no discernible increase in the Excess Crude Account (ECA), which was established as a fiscal buffer for oil revenues exceeding budget benchmarks. While Nigeria is earning more from higher international crude oil prices, checks reveal that the ECA, one of the country’s traditional oil savings mechanisms, shows little evidence of benefiting from this price surge. As of June 2026, the Federal Government reported the ECA balance at only $535,823.39, the same figure recorded in August 2025. The ECA was designed to save excess revenue when crude prices surpassed budget benchmarks, to be utilised during periods of falling oil prices or other fiscal emergencies. However, despite the current price surge, the account, which once held billions of dollars, has not seen substantial rebuilding.
Federal allocations distributed among federal, state, and local governments have considerably increased since the removal of fuel subsidy, although a significant drop was observed in the August release.
What Analysts Say
Energy expert Oyebode Fadipe stated that the figures represent an estimated gross revenue gain based on the assumptions used in the analysis. Fadipe confirmed the mathematical breakdown of the estimated $27.936 billion in gross receipts as technically correct based on the average crude price and production figures employed. He noted that the analysis highlights a substantial disparity between the crude price used in the 2026 budget and the estimated average market price during the period under review.
However, Fadipe also underscored that Nigeria’s actual production remained below the budgeted level. He emphasised that the broader question is whether the increase in crude receipts has translated into a corresponding improvement in Nigeria’s finances and the welfare of its citizens.
“What we have therefore is paper gain instead of cash reality. While the global oil surge theoretically grossed Nigeria $27.9 billion on paper, production shortfalls and debt-servicing arrangements mean the country is experiencing a jobless windfall where the average citizen feels only the inflation, not the revenue,”
he remarked. He further highlighted the potential impact of higher international crude prices on the cost of refined petroleum products, suggesting that increased crude prices could elevate fuel costs, thereby offsetting some of the benefits from higher crude export earnings. Fadipe concluded that Nigeria’s inability to meet the 1.84 million barrels per day production target in the 2026 budget further curtailed the potential benefits from the crude price surge.
Marcel Okeke, former chief economist at Zenith Bank, affirmed the economic accuracy of the analysis estimating Nigeria’s potential oil windfall, given the underlying assumptions. He cautioned, however, that higher nominal revenue does not automatically translate into increased purchasing power, as rising prices can erode the real value of additional income. He advised applying the same principle when assessing Nigeria’s oil windfall, noting that the analysis could reasonably estimate the country’s gains from the surge in crude prices.
Benefits for Nigerians?
While the government reaps rewards from higher oil prices, households face a different reality due to Nigeria’s current market-based petrol pricing regime. This system means that global energy price fluctuations directly influence domestic fuel prices. With the end of the subsidy, rising crude prices exert pressure on petroleum product costs.
As the 2027 election cycle commences, this issue has become a central talking point, with one of the presidential hopefuls, Atiku Abubakar of the African Democratic Congress (ADC), pledging to reinstate the fuel subsidy. Atiku declared that if elected, he would replace Nigeria’s previous import-subsidy system with a targeted, capped, transparently budgeted, and independently audited production subsidy. This, he claimed, would reduce energy costs while accelerating domestic refining.
Dr. Umar Yakubu of the Centre for Fiscal Transparency and Public Integrity asserted that the federal government has failed to translate this price-driven revenue boost into tangible relief for citizens struggling with high domestic fuel costs and inflation. He stated that instead of fortifying institutional buffers in the Sovereign Wealth Fund or ECA, excess receipts are routinely absorbed by recurrent expenditure, operational costs, and debt servicing.
“Consequently, domestic pump prices remain tied to import costs and currency volatility, leaving Nigerians exposed to rising living costs without seeing the benefit of national windfall revenues,”
he concluded. Dr. Yakubu stressed that for long-term economic stability, excess oil revenues must be managed through a structured policy framework focusing on savings, targeted capital investment, and absolute transparency. He recommended that a fixed portion of all windfall funds should be mandatorily saved in institutional reserves to provide a buffer against market shocks, with the remaining balance strictly ring-fenced for high-impact infrastructure projects.
Global Approaches to Mitigating High Fuel Prices
President Tinubu announced in late August that governors had agreed to implement a series of measures to reduce transportation costs across the country by October 1. This initiative involves the adoption of Compressed Natural Gas (CNG) and electric vehicles within the public transport system. However, investigations reveal strong indications that many states may miss this deadline, as numerous states possess only one, two, or three CNG stations, while others have none, alongside a scarcity of CNG conversion facilities in most regions.
Globally, countries, including several African nations, have introduced measures to alleviate the impact of the cost-of-living crisis triggered by soaring fuel prices.
- Kenya: The Kenyan government implemented fuel tax adjustments and energy support measures after rising global crude prices threatened transportation and food supply chains. In April, President William Ruto affirmed that government subsidies, tax reductions, and import arrangements had successfully prevented steeper increases at the pump. He stated that the government had allocated Sh6.5 billion to subsidise fuel costs and reduced VAT to moderate prices, assuring citizens of continued governmental efforts.
- South Africa: Temporary fuel levy adjustments and expanded interventions were introduced to curb imported fuel inflation. The Minister of Finance, in consultation with the energy ministry, approved a short-term reduction of 300 cents per litre on petrol and 393 cents per litre on diesel, which was effective from May 6 to June 2, 2026. The country also reviewed transportation support programmes amidst concerns that rising diesel prices could exacerbate food inflation and logistics costs.
- Namibia: Fuel price stabilisation interventions and subsidy support were rolled out to protect transport operators and consumers from volatile international oil prices. To mitigate consumer impact, the government temporarily reduced or suspended selected statutory fuel levies by up to 50 percent for three months from April 1, 2026.
- India: Reductions in excise duties on petrol and diesel were announced, with state governments urged to cut local fuel taxes. The Indian government lowered excise duty on petrol from 13 Indian rupees per litre to 3 Indian rupees per litre and completely removed a ₹10 per litre excise duty on diesel. This intervention reportedly cost the government nearly ₹70 billion every two weeks in lost revenue.
- France: Fuel rebate schemes for motorists were expanded, while electricity support programmes worth billions of euros were maintained. These rebates reached as high as €0.30 per litre.
- Germany: Temporary fuel tax reductions were adopted, and public transport incentives were expanded to reduce inflationary pressure.
- United Kingdom: Energy support programmes and fuel duty freezes, previously introduced during earlier energy crises, were maintained. The UK sustained its 5p per litre fuel duty cut and continued household energy support programmes providing hundreds of pounds for vulnerable consumers.
- United States: Millions of barrels of crude oil were released from its Strategic Petroleum Reserve, and discussions were held regarding temporary fuel tax holidays to moderate gasoline prices. American lawmakers also debated a temporary federal gasoline tax holiday of 18.4 cents per gallon to reduce fuel costs for consumers.
Transparent Management of Oil Windfall Advocated
Dr. Ayodele Oni, a prominent oil and gas expert, urged the federal government to adopt a disciplined and transparent approach to managing Nigeria’s burgeoning oil windfall. He warned that this opportunity could be squandered if the additional revenue is not intentionally saved and invested. Oni asserted that the current surge in crude oil prices presents Nigeria with a chance to solidify recent economic reforms, particularly because some factors that undermined previous oil booms have changed.
“The first thing to say is that this windfall is real, and it is arriving at a time when Nigeria is far better placed to keep it than in past cycles,”
he noted. According to Oni, Nigeria’s experiences during previous periods of high oil prices, notably in 2008 and 2011, demonstrated how easily additional petroleum revenues could be consumed by government policies and escalating expenditures.
“In 2008 and 2011, high oil prices were largely consumed by fuel subsidies and an overvalued exchange rate,”
he stated. Oni observed that the current economic environment is distinct, with the elimination of the petrol subsidy and the implementation of a more market-determined exchange rate regime.
“Today, the subsidy is gone, the exchange rate is market-determined, gross reserves have climbed above $50 billion and the National Assembly has already moved the benchmark from $64.85 to $75 to bring part of the upside into the budget,”
he elaborated. He stressed that the priority now should be to consolidate these reforms rather than revert to policies that could quickly deplete the additional revenue.
“So what this portends, if handled properly, is a genuine chance to consolidate the reforms of the last three years rather than reverse them,”
Oni affirmed. However, he advised against treating the entire difference between the budget benchmark and prevailing international crude prices as immediately available for spending.
“I would also temper the framing slightly. The excess above the benchmark flows into the Federation Account and is shared monthly through FAAC, which is published. The question is therefore not whether the money exists on paper, but whether it is being ring-fenced and applied deliberately,”
he explained. Oni also highlighted Nigeria’s production challenges, suggesting that the country would have benefited more if it had achieved the production level stipulated in the 2026 budget.
Regarding the deployment of additional revenue, Oni identified four key priorities: transparency, targeted consumer support, investment in oil production, and strengthening the country’s financial position.
- Transparency: Publish a monthly statement of excess crude proceeds and channel the Federal Government’s share through the NSIA Stabilisation Fund, which already has a statutory framework.
- Targeted Consumer Support: Utilise a defined portion to cushion consumers in a targeted manner, such as transport support, accelerated CNG conversion, and ensuring domestic refineries, including Dangote, receive crude under the domestic supply obligation in Naira, rather than reverting to a blanket subsidy that would consume gains within months.
- Investment in Oil Production: Reinvest in initiatives that genuinely multiply revenue, including pipeline security, well restoration, and unlocking deepwater projects that the recent tax remission order was designed to attract.
- Strengthening Financial Buffers: Safeguard the reserve position and repay expensive debt.
Oni cautioned against perceiving the current oil-price surge as a permanent income source, stating,
“Windfalls do not last. Gulf prices could fall as quickly as they rose. The institutions we build while the money is flowing are what will remain.”
Emeritus Professor of Petroleum Economics, Prof. Wumi Iledare, speaking to Daily Trust, concurred that Nigeria’s recent crude price surge presents an opportunity, but emphasised that the windfall must be managed within the confines of the Petroleum Industry Act (PIA) and the approved national budget. He clarified that not all additional oil revenue is available for government spending, as the PIA’s royalty-by-price mechanism legally allocates part of the price increase to the Nigerian Sovereign Investment Authority (NSIA), transforming it into sovereign savings and investment capital rather than ordinary budget revenue. NSIA’s financial reports, he noted, confirm the ongoing receipt of these contributions.
“A separate category is the additional petroleum revenue that actually accrues to the Federation when oil prices exceed the assumptions used in the approved budget. That revenue should first improve budget performance, reduce the financing gap and limit new borrowing. The amount available depends on production, royalties, taxes, allowable costs, exchange rates and collection efficiency. The central question is therefore: how much additional petroleum revenue has actually accrued to the Federation?”
he posed.
He further explained that even Federation revenue available for fiscal use does not automatically grant authority for new spending. Existing appropriations remain binding, and expenditures outside the approved budget necessitate adherence to the required legal process, including a supplementary appropriation if necessary.
Prof. Iledare added that priorities should therefore include transparently accounting for the windfall, directing legally committed royalty-by-price revenue to sovereign investment via NSIA, channelling available additional Federation revenue to bolster the approved budget and reduce deficit financing, building fiscal buffers and savings where legally appropriate, and authorising any new spending through proper legislative channels.
“Nigeria should not convert a temporary oil-price increase into permanent spending commitments. Oil prices are volatile, and expenditure based on unsustainable prices could create serious fiscal problems when prices fall.”
He concluded.
“The principle is simple: windfall revenue should strengthen fiscal sustainability before it expands government spending. Nigeria’s objective should be to convert temporary petroleum revenue into lasting economic and social value through transparent accounting, lower borrowing, sovereign savings and carefully selected, properly appropriated investments,”
he advised. Prof. Iledare asserted that the true measure of an oil windfall is not how much the government can spend today, but rather how much enduring value Nigeria can generate from revenue that may not be available tomorrow.