Oil prices rose slightly on Wednesday as tensions between the United States and Iran kept markets on edge, a move that could provide a much-needed boost to Nigeria’s oil-dependent economy and its 2026 federal budget framework.
Brent crude futures were up 6 cents at $70.83 a barrel by 0957 GMT, while U.S. West Texas Intermediate (WTI) gained 4 cents to $65.67 per barrel.
A Reuters report linked the recent rallies that pushed Brent and WTI to their highest levels in months rising Middle East tension as the U.S. positioned military assets in the region to put pressure on Tehran over its nuclear and missile programmes.
A prolonged conflict could disrupt oil flows from Iran and neighbouring producers, tightening global supply.
In his State of the Union address, U.S. President Donald Trump reiterated tough stances on Iran, adding to the perceived risk premium in prices.
“This uncertainty means the market will continue to price in a large risk premium and remain sensitive to any fresh developments,” ING commodities strategists said.
Diplomatic efforts continue, with U.S. envoys set to meet Iranian counterparts in Geneva on Thursday, while Iran insists a deal is “within reach” if diplomacy is prioritised.
However, traders are also watching ample supply signals, including a reported 11.43 million-barrel build in U.S. crude inventories in the week to Feb. 20, which tempered gains.
For Nigeria — Africa’s largest crude exporter and heavily dependent on oil revenues — sustained prices above budget benchmarks carry significant economic implications.
The country’s 2026 federal budget is anchored on an oil price benchmark of $64.85 per barrel and assumes daily production of about 1.84 million barrels, according to official fiscal documents and budget projections.
Crude trading above this level, as it did on Wednesday, would help shore up government revenue, support foreign exchange inflows and ease pressure on fiscal and external balances. Previous reports suggest oil earnings are expected to generate roughly N60.97 trillion ($43.55 billion) in gross revenue under the 2026 plan.
Sustained prices could also help narrow projected deficits and stabilise the naira, which remains sensitive to swings in oil income.
Yet analysts warn that wide price fluctuations remain a risk to fiscal performance, especially if Brent dips back below key thresholds. Nigeria has grappled with production shortfalls, pipeline vandalism and other structural challenges that have historically constrained output and revenue.
Official U.S. supply data from the Energy Information Administration later on Wednesday could offer further direction for the market.
