By John Danjuma Omachonu
Nigeria’s crude oil production plunged by 10.27 percent to 1.31 mbpd in February from 1.42 mbpd in January, according to the Organisation of Petroleum Exporting Countries, (OPEC).
At a time that Nigeria is supposed to enjoy the economic windfall, ocassioned by the rising prices of crude at the international oil market due to the ongoing America/Israel and Iran war, Nigeria’s production has diped thereby preparing to foot the inflation bill.
Oil output dips, when the amount of crude oil produced over a specific period, often due to operational disruptions like pipeline vandalism, theft, or maintenance, leading to reduced revenues, market instability, and lower government income.
After months of uncertainty surrounding the 2026 budget, the Federal Executive Council (FEC) recently endorsed the 2026-2028 Medium-Term Expenditure Framework (MTEF).
The fiscal policy paper outlined the nation’s core economic benchmarks, projected revenues, and fiscal direction for the next three years.
Besides the United States, the big winners from the crisis are the other major exporters with spare capacity.
Specifically, President Donald Trump said on Thursday that the United States stood to make significant money from oil prices driven higher by the war with Iran, prompting criticism from some lawmakers who accused him of caring only about rich people.
Oil prices jumped more than 10% to over $100 a barrel, as the U.S.-Israeli war with Iran widened, before it receded.
Trump, a Republican, wrote on social media: “The United States is the largest Oil Producer in the World, by far, so when oil prices go up, we make a lot of money.”
Indeed, Iran had told the world on Wednesday that crude price might spike to $200 per barel, banking on the heightened tension and insecurity in the region.
Brent oil hit all-time highs in 2008 of around $147 per barrel, on tension between the West and Iran over its nuclear program, which resulted in weak U.S. dollar and inflation fears.
This time, analysts say, oil prices could remain high because of the strait’s unprecedented shuttering.
Iran’s new Supreme Leader Mojtaba Khamenei said on Thursday the strait should remain closed as a pressure tool.
“Get ready for the oil barrel to be at $200 because the oil price depends on the regional security which you have destabilized,” Ebrahim Zolfaqari, the spokesperson for Tehran’s Khatam al-Anbiya military command headquarters, said on Wednesday.
While Saudi Arabia, United Arab Emirates, Kuwait, Russia for instance, could manoeuvre through re-routing, LNG exports and emergency sales opportunities, like Russia despite series of attacks from Iran on some of the neighbouring counties, oil‑importing economies like Nigeria, EU, India, among others are denied the premium as production falls.
According to Bismarck Rewane, chief executive of Financial Derivatives Company, in the FDC Commodity Update for March 12,
Burning Economic Issues, oil prices reversed downward trend as end of conflict seems uncertain.
“Nigeria’s crude oil production plunged by 10.27% to 1.31 mbpd in February from 1.42 mbpd in January- OPEC. A decline in Nigeria’s oil production could cause the country to miss the potential oil revenue windfall from rising global oil prices.”
2026 Budget Anchors, Economic Implications
* Oil benchmark: $64 per barrel (Senate later cut to $60, but the executive framework uses $64)
*FG targets 2.06m bpd, and N1,512/$1 exchange rate
* Peak Brent in the Iran‑war rally hit
$100/barrel, roughly $36 above the budget benchmark;
* Budgeted production figure was 1.8 mbpd, while
– Extra revenue per day= 1.8 m × $36 =$65 m. Over a month that’s $2 bn or ₦3 trillion at ₦1,512/$ (if output held).
Reality Check
– Nigeria’s actual output fell to
1.31 mbpd in Feb, so the windfall was muted; lost volume offsets much of the price gain.
Every $10 rise above $64 would have added roughly ₦0.9 trillion monthly at budgeted output—money that could ease deficit or fund subsidies, but it largely went to higher‑producing exporters instead.
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Crude production plunge from 1.42 to 1.31, could mean possible lost of barrels, revenue, widening deficit, naira under pressure and widening the import‑bill gap.
Nigeria’s inverse move tests president Tinubu’s fiscal mathematics providing divergent exposures to oil‑price swings, fueling public debate on diversification, among others.
The federal government’s projected revenue for 2026 stands at ₦34.33 trillion, reflecting ongoing efforts to boost non-oil earnings, strengthen tax administration, and expand the nation’s economic base.
The expenditure breakdown shows debt service will be ₦10.91 trillion, and non-recurrent expenditure (personnel cost) will be around ₦15.27 trillion. The deficit is projected at ₦20.1 trillion, which is 3.61% of the estimated GDP.
Moderated Inflation Figures Purely Academic
The nation’s Bureau of Statistics (NBS) will be releasing its February inflation data on March 16.
Although Rewane observes in the Economic Splash for March 13 that, based on its time-series model and commodity market survey in Lagos, the February inflation will slow further to 14.07% from 15.10%, he noted that the figures will be purely academic.
However, he said the anticipated moderation is driven by a relatively stable exchange rate, which led to the reduction in the prices of imported commodities, adding, “increased food supply and continued consumer resistance to higher prices, driven by reduced disposable income, are expected to contribute to the easing inflation.”
According to him, all inflation sub-indices are expected to mirror the headline inflation decline. Food inflation is projected to decline to 8.89% from 10.84%, while core inflation is expected to moderate to 17.72% from 18.63%.
“However, this projection is largely academic and must be interpreted with caution. We need to discount these estimates given the Iran conflict started at the end of February, introducing new uncertainty into the outlook,” he said
For March inflation readings, the economist predicted that the Iran conflict will push the figures much higher
“The immediate transmission channel is through energy prices. Following the global shock, PMS price increased by 46.9% to N1,232/litre, while diesel rose by 52.5% to N1,510/litre. This will have a knock-on effect on commodity prices, distribution costs and overall production expenses. We do not know how long this conflict will last. However, if it lasts longer than 2 months, the ripple effect on inflation and economic activities could become severe,” Rewane said.
