A sudden military escalation between Israel and Iran has jolted global oil markets, sending Brent crude above Nigeria’s critical 2025 budget benchmark of $75 per barrel — a development that could help Africa’s top oil exporter close its budget gap and support its struggling currency.

Brent crude futures for July delivery surged over 9%, hitting $75.15 per barrel — the highest since early February — while West Texas Intermediate (WTI) jumped to $74. Bonny Light, Nigeria’s domestic benchmark, traded at $78.60, well above the government’s budget assumption.

“This sudden windfall could help improve revenue inflows, reduce borrowing needs, and cover planned public expenditures without resorting to drastic cuts or tax hikes,” a BusinessDay analysis revealed.

Nigeria’s 2025 federal budget is pegged on a $75 oil benchmark. Prices had hovered near $60 for months, putting pressure on public finances. The recent price rebound offers fiscal relief — though analysts warn it may be short-lived.

Impact on Naira

With over 90% of Nigeria’s foreign exchange inflows tied to oil, the naira — which has been under pressure, trading above ₦1,600 to the dollar — could see much-needed relief.

“Improved petro-dollar inflows could ease pressure on the naira, enhance liquidity, reduce FX premiums, and help stabilise the currency,” financial experts said.

The naira has been struggling to meet the government’s budgeted exchange rate of ₦1,400 per dollar, but rising oil prices are brightening the currency’s outlook.

Cautious Optimism

Despite the short-term fiscal and currency gains, economists caution against overreliance on oil.

“Nigeria must still address structural issues, such as achieving its target of 2.06 million barrels per day — currently closer to 1.6 million — and further diversifying its economy,” the report warned.

The geopolitical risk premium could also swing back fast, depending on how the Israel-Iran conflict unfolds, raising concerns about the sustainability of the price gains.

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