With Brent crude trading above $99 per barrel—above Nigeria’s 2026 federal budget benchmark of $64.85—the price rally would largely bolster the country’s fiscal revenues, foreign exchange reserves and promote exchange rate stability. Analysts posit that a full-scale conflict disrupting the Strait of Hormuz—a choke point for about 20 per cent of global oil flows—could lift Brent prices above $100 per barrel. With the naira stable and foreign reserves already gaining more grounds following key reforms instituted by the Olayemi Cardoso-led Central Bank of Nigeria (CBN), the ongoing oil prices rally presents opportunity for the local currency and external reserves to consolidate gains.
Brent Crude and West Texas Intermediate have climbed above $99, with Brent briefly topping $99 as tanker traffic through the Strait of Hormuz remains severely disrupted.
Very few tankers are crossing the choke point, leaving millions of barrels stranded.
Murban crude, meanwhile, last week hit $119 and sped past it, reflecting the continued freeze of most tanker traffic in the Strait of Hormuz.
Energy Secretary Wright tried to instill a sense of optimism among consumers by essentially pointing out that with no pain, there would be no gain. “If this is brief in duration, it’s a small dislocation,” Wright told the Wall Street Journal last week in an interview.
For Nigeria, oil prices increase comes with significant gains in terms of revenue, and economy stability given that over 90 per cent of the country income are from petrodollars.
Already, the naira has traded below the N1,400/$1 level on the official market for the first time in over a year, marking a notable psychological and market milestone for the currency.
President, Association of Bureaux De Change Operators of Nigeria (ABCON), Aminu Gwadabe, said the naira has remained stable across market for several months, ending years of volatility in the market.
Additionally, Managing Director of Financial Derivatives Company (FDC), Bismarck Rewane, estimated the fair value of the naira at about N1,257 to the US dollar.
Rewane posits that the local currency is undervalued by approximately 11 per cent when assessed using the purchasing power parity (PPP) model.
Rewane made the submission during his keynote address at the 2026 Economic Outlook organised by the Association of Corporate Treasurers of Nigeria (ACTN), where he anchored the session and offered a detailed analysis of the structural and cyclical factors influencing Nigeria’s exchange-rate movements.
He noted that currencies typically converge towards their PPP-implied values over a five-year horizon.
According to him, the appropriate exchange rate based on current PPP estimates stands at N1,256.79 to the dollar, reinforcing the view that the naira remains below its fair valuation level.
A weak dollar is dislocating many markets, but it is good for Africa, as we are seeing with the naira,” Charlie Robertson, author of The Time Travelling Economist, said.
The rally in the naira also reflects rising confidence in Nigeria’s macroeconomic direction, supported by stronger foreign exchange inflows, rising external reserves and improved market governance.
Reserves also upbeat
The foreign reserves have also made significant gains, pushing through major hurdles and hitting $50.45 billion on February 16.
That means the CBN has exceeded its forecast of $51.04 billion reserves position this year.
CBN Governor, Olayemi Cardoso had, in the apex bank’s 2026 Macroeconomic Outlook for Nigeria, projected that Nigeria’s external reserve would rise to $51.04 billion in 2026, supported by stronger oil earnings, foreign exchange (FX) market reforms, and improved external inflows.
The apex bank said the outlook reflects higher oil revenues, increased bond issuance, sustained diaspora remittances, FX market reforms, and expanded domestic refining capacity.
The CBN stated, “The external reserves is projected at US$51.04 billion in 2026, compared with US$45.01 billion in 2025. The external reserves is expected to be boosted by reduced pressure in the FX market based on the anticipated rise in oil earnings, sovereign bond issuance, and diaspora remittance inflow.’’
Net external reserves position
According to Cardoso, the net foreign exchange reserves, stood at $34.80 billion at the end of December 2025.
He stated that the figures emphasised the benefits of increased transparency and credibility in foreign exchange management, boosting investor confidence, attracting stronger FX inflows, and improving reserve management practices aimed at preserving capital, ensuring liquidity, and supporting long-term sustainability.
According to him, the improvement represents a substantial strengthening in both the level and quality of Nigeria’s external buffers over the past three years.
He disclosed that net reserves increased sharply from $3.99 billion at the end of 2023 to $34.80 billion at the close of 2025, reflecting what he described as a fundamental improvement in reserve quality. He added that the 2025 net reserve position alone exceeded the total gross reserves recorded at the end of 2023, which stood at $33.22 billion.
Cardoso further stated that net reserves rose from $23.11 billion at end-2024 to $34.80 billion at end-2025, while gross external reserves increased to $45.71 billion from $40.19 billion over the same period, representing an increase of $5.52 billion. He said the expansion highlighted Nigeria’s enhanced capacity to meet external obligations, support exchange rate stability and reinforce overall macroeconomic resilience.
Nigeria’s external reserves have also continued to rise, increasing by $5.82 billion or 14.45 percent to $46.11 billion as of January 28, 2026, from $40.29 billion recorded on December 2, 2024, according to data on the CBN website.
Nigeria’s external reserves crossed the $46 billion mark for the first time in about eight years, highlighting the steady growth the reserve has been recording since 2025.
According to the latest data from the Central Bank of Nigeria (CBN), the country’s external reserve has increased by about $510 million in 22 days, moving from $45.502 billion on December 31, 2025, to $46.012 billion on January 22, 2026.
Other industry data shows that Nigeria’s external reserves were last at this level on August 27, 2018, when it stood at $45.9 billion.
The reserve build-up signals stronger buffers for import cover and currency stability, reflecting steady inflows and improved foreign exchange management since the forex reforms began, as the country prepares for a general election.
The CBN data also suggests a notable turnaround from the volatility experienced during the early phase of the new forex regime, with the reserves closing at about $45.5 billion in 2025, having opened the year at roughly $40.8 billion.
Analysts have expressed optimism that the steady growth of Nigeria’s external reserve for several months will be sustained this year.
They said that the various reforms by the government have brought stability and confidence, thereby causing improvement in the country’s external reserves.
They, however, noted that while the reserves can be sustained in the short term, sustaining the momentum throughout the election year will depend on discipline on the part of the government.
Foreign capital inflows rise
Foreign capital inflows reached US$20.98 billion in the first 10 months of 2025, a 70 per cent increase over total inflows for 2024 and a 428 per cent surge compared to the US$3.9 billion recorded in 2023, reflecting a clear resurgence in investor confidence.
The Central Bank of Nigeria (CBN) Governor, Olayemi Cardoso explained that naira now trades within a narrow, stable range. The huge gap between the official and parallel markets has shrunk to under two per cent, from over 60 percent.
For him, macroeconomic indicators show that Nigeria is more resilient to external shocks today than at any point in our recent history.
For instance, Nigeria’s external sector strengthened decisively in 2025, with the current account balance rising over 85 percent to US$5.28 billion in Q2, up from US$2.85 billion in Q1. Bolstering our external buffers, foreign reserves reached US$46.7 billion by mid-November, the highest in nearly seven years, providing over 10 months of forward import cover and significantly enhancing the economy’s resilience.
Cardoso explained that what is most important here is that our FX reserves are being rebuilt organically, not by borrowing, but through improved market functioning, stronger non‑oil exports, and robust capital inflows.
“While oil production improved modestly to an average of 1.45–1.52 million barrels per day in 2025, the truly encouraging development is the strong performance of non-oil exports. Supported by ongoing reforms and greater exchange-rate flexibility, non-oil exports have grown by more than 18 per cent year-on-year, reflecting rising competitiveness under a truly market-driven FX framework,” he said.
He disclosed that as with foreign investor inflows, diaspora remittances have also strengthened with confidence returning to official channels following enhancements in transparency, settlement efficiency, and reporting. Remittances increased by approximately 12 per cent this year, and we expect this momentum to continue as the Non-Resident BVN, launched earlier this year, becomes more widely adopted in 2026.
Major policy shifts lifting economy
Prof. ‘Abiodun Adedipe, founder and Chief Consultant of B. Adedipe Associates Limited (BAA Consult), listed major policy shifts yielding positive results for the economy. He said that the CBN has eliminated strange arbitraging and round tripping opportunity through the forex market reforms; through petrol subsidy removal, the Federal Government Remove crippling annual waste of US$10.7 billion and created environment for competition; bank recapitalisation is creating stronger and more capable banks to fund US$1 trillion economy while fiscal consolidation is plugging leakages, deploying technology and making government agencies more accountable and expanding fiscal space at sub-national.
Continuing, Adedipe said the real game changer remains the tax reforms, capable of igniting regional competition (the secret behind Chinese economic renaissance) while the Nigerian Education Loan Fund, Consumer Credit Corporation, Recapitalized Bank of Agriculture, National Credit Guarantee Company Ltd, Single digit interest rate mortgage loans are major steps that should be taken to support sustainable economic growth.
Support for domestic economy
Adedipe said that Nigeria’s economy is supported by large, youthful and rapidly growing population (estimated at 237.53 million in July 2025 and sixth largest in the world, median age at 18.1 years).
The country, he said, also benefits from rapid urbanisation with 54.28 percent in December 2023, up from 46.12 percent in 2013 and 51.96 percent in 2020, deepening internet penetration which is at 48.15% in April 2025, up from 45.57 percent in August 2023 and 31.48 percent in December 2018.
Nigeria’s tele-density at 79.65 percent in May 2025, from 76.08 percent in December 2024 and 102.97 percent in Dec 2023, due to data cleanup at end of April 2024.
“On global internet users, shows that Nigeria with 123 million ranks 11th and 7th with over 84 per cent on mobile devices. Local oil refining continues to expand and prospects of new refineries, manufacturing is reviving and there is expanding interest in non-oil exports.
Improvement in infrastructure will begin to positively impact the cost of doing business,” he said.
He added that sustained deep reforms will enhance global competitiveness and Ease of Doing Business, plug leakages and shrink the space for economic rent.
Fiscal‑monetary coordination
The CBN explained that monetary reform cannot be effective in a vacuum. Alignment with fiscal policy has strengthened Nigeria’s macro stability and yielded tangible results including reduced domestic borrowing costs, improved liquidity conditions, and more predictable fiscal operations.
For instance, the discontinuation of direct deficit financing signals one prong in our commitment to discipline.
“This stance is unequivocal as there will be no return to the practice of financing fiscal deficits by the Central Bank. In parallel, the fiscal authorities have embarked on key institutional reforms – including the implementation of a Revenue Optimisation (RevOp) framework, the establishment of a new National Revenue Agency, and upgrades to the Treasury Single Account (TSA) – to strengthen revenue mobilisation and public financial management,” Cardoso said.
“As we transition towards a full‑fledged inflation‑targeting framework, this partnership will deepen, ensuring fiscal and monetary policies reinforce each other in delivering durable price stability,” he added.
Oil/gas output, revenue position
The Nigerian National Petroleum Company Limited (NNPC Ltd) reported a significant surge in revenue, hitting N5.08 trillion in October 2025, up from N4.27 trillion recorded in September. The figures are contained in the company’s Monthly Report Summary for October 2025.
According to the report, NNPC Ltd’s profit after tax (PAT) rose sharply to N447 billion in October, compared to N216 billion in September, stronger operational efficiency, improved market conditions, and enhanced cost optimisation strategies deployed by the national oil company.
The report shows that production hit 6,997 million standard cubic feet per day (mmscf/d) in October, up from 6,284 mmscf/d in September.
Gas sales, reported on an M-2 basis, climbed to 4,713 mmscf/d, marking a significant increase from 3,443 mmscf/d recorded in the previous month.
Crude oil production experienced a slight dip, falling to 1.58 million barrels of oil per day (mmbopd) in October from 1.61 mmbopd in September.
NNPC Ltd also stated that it will continue to sustain industry-wide collaboration and drive production recovery initiatives.
Nwadike, a financial analyst, writes from Abuja
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