LAGOS, July 3 – Citi has projected that Brent crude could fall to around $60 per barrel before the end of 2026, adding to concerns over Nigeria’s fiscal outlook as lower oil prices threaten government revenues and foreign exchange earnings.
The investment bank believes the global oil market is rapidly shifting away from conflict-driven pricing and back toward underlying supply and demand fundamentals. With shipping through the Strait of Hormuz returning to normal following the ceasefire between the United States and Iran, the geopolitical premium that supported crude prices has largely disappeared.
Brent crude, which climbed to about $115 per barrel on May 1, 2026, has since retreated to around $72 per barrel, reversing all of the gains recorded during the period of heightened tensions in the Middle East.
According to Citi strategists led by Francesco Martoccia, “Fundamentals are rapidly reasserting themselves.” They noted that “Shipping flows are normalising, Chinese buyers remain absent, physical crude markets have weakened sharply, and inventories have drawn far less than expected.”
The bank also said “Some leading European powers now understand that they may need to agree to pay transit fees to Iran and Oman to use the Hormuz route to continue to have access to oil and products.”
For Nigeria, the changing market presents a significant fiscal challenge. The Federal Government’s 2026 budget is based on an oil benchmark price of $64.85 per barrel and production of 1.84 million barrels per day. However, Nigeria has consistently struggled to achieve that production target, leaving public finances vulnerable to both lower output and declining prices.
A prolonged drop in crude prices would reduce export earnings, weaken foreign exchange inflows and limit the country’s ability to build external reserves. It would also increase pressure on a budget that already projects a ₦23.85 trillion fiscal deficit, with much of the financing expected to come from domestic and external borrowing.
The resumption of normal shipping through the Strait of Hormuz has restored confidence across global energy markets, allowing additional crude supplies to reach international buyers and reinforcing expectations of a more balanced market.
Citi added that “The initial period is expected to be volatile given that shipping lines rebalance and insurance markets react while working through any residual capacity constraints.” However, it said “The fact that orderly transit, increased volumes, and re-establishment of normal shipping patterns appear to be resuming implies that operators consider the current risk level more manageable than unmanageable.”
The bank is not alone in its outlook. Goldman Sachs has said the oil market is likely to return to surplus conditions as supply recovers, while Morgan Stanley has also lowered its price forecasts after warning that growing production could outpace demand.
Citi expects Brent crude to trade within a $60 to $65 per barrel range by the end of the year, arguing that improving supply conditions and subdued demand, particularly from China, are likely to keep prices under pressure.
For Nigeria, the forecast reinforces the need to accelerate non-oil revenue generation, improve crude production and strengthen fiscal discipline as the country prepares for a potentially weaker oil market.
