Oil prices rebound sharply after weeks of relative calm, putting Nigeria’s crude-dependent revenues in focus as Brent trades well above 2026 budget benchmark…..
Crude oil prices have climbed above $95 per barrel for the first time in five weeks as renewed military exchanges between the United States and Iran intensified fears of a fresh disruption to global oil supplies through the Strait of Hormuz.
Brent crude was trading at $95.40 per barrel, while US West Texas Intermediate (WTI) stood at $90.66 per barrel, according to checks by Nairametrics.
The latest move marks a sharp reversal in the oil market after prices had retreated in recent weeks on hopes that diplomatic efforts would ease tensions around the strategic waterway.
Brent last traded above the $95 mark in late July, when it reached $95.24 per barrel on July 22, 2026.
The renewed rally followed an escalation in military activity between Washington and Tehran, raising concerns that further hostilities could threaten the movement of crude through the Strait of Hormuz, one of the world’s most important oil shipping routes.
The latest escalation came after the United States Central Command said it had completed a wave of strikes against targets linked to Iran’s Islamic Revolutionary Guard Corps (IRGC).
According to the US military, the targets included air defence installations, radar systems, maritime assets, mine-laying capabilities and communications facilities.
Iran subsequently said it had retaliated by striking US assets in Jordan and Iraq, while Iranian media reported attacks in Bahrain.
The IRGC also claimed that a large number of US military personnel had been killed in Jordan.
However, two US officials told Reuters that initial assessments indicated there had been no American casualties.
The latest exchanges represent the most serious escalation between Washington and Tehran in several weeks, bringing renewed uncertainty to a market that had begun to price in a possible easing of tensions around the Strait of Hormuz.
The waterway remains particularly important to global energy markets because any prolonged disruption to shipping through it could affect the movement of substantial volumes of crude oil and petroleum products.
Geopolitical concerns were not the only factor supporting the latest rise in crude prices.
Declining US crude inventories have also provided additional momentum to the market.
The American Petroleum Institute estimated that US crude oil inventories fell by 2.6 million barrels in the week ended August 28.
The decline reversed the previous week’s 4.2 million-barrel increase and pointed to a tightening in commercial crude stocks.
API data showed that commercial crude inventories, excluding the Strategic Petroleum Reserve, have fallen by more than 48 million barrels over the past 20 weeks.
Despite the sustained drawdown, US crude inventories remain about 3.1 million barrels higher so far this year.
The latest price movement represents a significant turnaround from the situation just one week ago.
Brent crude had fallen by almost $9 per barrel over the preceding seven days, representing a decline of approximately 9.6 percent, after efforts by Iran and Oman to restore navigation through the Strait of Hormuz eased concerns about a prolonged supply disruption.
Those developments had encouraged traders to anticipate a gradual return to normal shipping conditions and reduced the geopolitical premium attached to crude.
That optimism has since faded as military tensions between the US and Iran have intensified.
On Monday, crude prices had already crossed the $90 per barrel threshold after Washington and Tehran resumed military strikes linked to tensions over the Strait of Hormuz.
The latest escalation has now pushed Brent above $95, highlighting how quickly geopolitical developments can reverse movements in the oil market.
What Higher Oil Prices Mean For Nigeria
The renewed rally could have important implications for Nigeria, where crude exports remain a major source of government revenue and foreign exchange earnings.
The development comes shortly after new economic data showed an improvement in the performance of Nigeria’s oil sector.
The sector grew by 7.31 percent year-on-year in the second quarter of 2026, a significant improvement from the 2.57 percent expansion recorded in the first quarter.
However, the Q2 growth rate remained below the 20.46 percent recorded in the corresponding quarter of 2025.
On a quarter-on-quarter basis, Nigeria’s oil sector expanded by 10.91 percent.
Its contribution to real GDP also increased to 4.16 percent in the second quarter, compared with 4.05 percent in Q2 2025 and 3.92 percent in Q1 2026.
The broader economy recorded stronger growth during the period, with real GDP expanding by 4.43 percent year-on-year in Q2 2026, compared with 4.23 percent in the same quarter of 2025.
The stronger oil sector performance underscores the continued importance of crude production to Nigeria’s economic outlook.
For the Federal Government, sustained high international crude prices could translate into stronger oil revenues and improved foreign exchange inflows, provided domestic production remains stable and Nigeria is able to sell its crude at favourable prices.
Brent Now Well Above Nigeria’s Budget Benchmark
The latest rally is particularly significant because Brent crude is trading far above the price assumption underpinning Nigeria’s 2026 budget.
The budget is based on a benchmark crude oil price of $64.85 per barrel.
With Brent now above $95, the international market price is more than $30 above the government’s fiscal benchmark.
If prices remain at elevated levels for an extended period, the gap could provide additional room for government oil revenues and foreign exchange earnings to outperform budget assumptions.
However, the potential gains are dependent on Nigeria maintaining or increasing crude production, ensuring efficient evacuation and successfully marketing its oil in international markets.
Higher global oil prices could therefore provide a much-needed boost to government finances, but the gains are unlikely to be automatic.
For an economy still heavily exposed to crude exports, the same geopolitical tensions driving prices higher also underline the vulnerability of global oil markets to supply disruptions and external shocks.
