Global oil prices surged on Tuesday following Israel’s unexpected military strike on Hamas-linked targets in Qatar, fueling concerns about potential disruptions in the energy-rich Gulf region.
The geopolitical shockwave pushed the price of Nigeria’s Bonny Light crude up to $67 per barrel, rising from $65, while Brent crude, the global oil benchmark, also climbed to $66.58, marking a gain of more than $1.00.
Qatar, though no longer a member of OPEC, remains a major producer of natural gas and oil. Market speculators reacted swiftly to the news of the attack, with fears that heightened instability could ripple through global supply chains.
Nigeria’s Budget Still Under Pressure
Despite the upward price movement, oil remains below the $75 per barrel benchmark projected in Nigeria’s 2025 budget, which is anchored on a production target of 2.06 million barrels per day and an exchange rate of ₦1,500/$.
The recent price gains may offer temporary fiscal relief, but analysts warn that broader market dynamics could reverse the trend.
Adding complexity to the situation, OPEC+ has announced plans to ease production cuts, which had previously helped prop up prices. According to the cartel, 137,000 additional barrels per day will be returned to the market beginning October 2025.
This decision could offset any price gains caused by geopolitical tensions.
“Relaxing oil cuts at this time means increasing supply, which is expected to culminate in pumping additional supplies to the market, thus causing prices to drop below $60 per barrel,” said Mazi Colman Obasi, President of the Oil and Gas Service Providers Association of Nigeria (OGSPAN).
The OPEC+ alliance noted that the production increase will be subject to review, with flexibility to pause or reverse the decision depending on evolving market conditions.
What This Means for Nigeria
While the immediate oil price bump offers Nigeria some breathing space, the broader picture remains uncertain. If OPEC+ maintains its production increase and Middle East tensions ease, prices could slide leaving Nigeria vulnerable to revenue shortfalls, especially given its heavy reliance on crude oil exports for budgetary financing.
As the global oil market reacts to both geopolitical shocks and production policy shifts, Nigeria will need to monitor developments closely to adjust its fiscal strategy accordingly.
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