There are concerns that the crisis in Venezuela presents a significant risk for Nigeria’s 2026 budget and the broader economy. While Venezuela and Nigeria are geographically distant, they are direct competitors in the global oil market.
After months of tactical preparations, the United States invaded Venezuela during the weekend. The U.S. military force launched strikes and captured President Nicolas Maduro and his wife on Saturday, January 3.
Thereafter, the U.S. President, Donald Trump, announced plans to run Venezuela for an unspecified period of time. Trump also disclosed his intention to invest in fixing the North American nation’s oil infrastructure and tap the crude oil resources and supply to other countries.
Venezuela has the largest proven crude oil reserves estimated at above 300 billion barrels as of 2023. However, the development of the country’s oil reserves has been affected by political crises over the years. Since the country founded its oil industry in 1914, after having an initial oil boom in the 1920s, the government monopolized oil and gas assets. Today, the country is barely able to produce 1.2 million barrels per day (mbpd). With an installed refining capacity of 1.3 mbpd, the refineries are only able to produce 130,000 bpd.
Trump’s announcement of plans to revive crude oil production in Venezuela has raised concerns about a supply glut and the impact on oil prices in the international market. This, according to experts, presents a significant risk to Nigeria’s 2026 budget and the economy generally due to potential impacts on global oil prices and Nigeria’s crude oil exports.
Economist and energy expert, Kelvin Emmanuel, said the development could put pressure on oil prices in the international market.
Speaking in an interview on Arise News channel, Mr Emmanuel expressed concern about the implications for Nigeria’s 2026 budget.
READ ALSO: Oil Prices Rise as Trump Orders Venezuela Tanker Blockade
With a proposed budget of N58.18 trillion, the oil price benchmark for 2026 is projected at $64.85 per barrel. Following the U.S. intervention, Brent crude has already dipped toward $60. Some analysts project a slide to $50 per barrel. Going by the 2026 budget estimate, Nigeria is expected to produce 1.84 million bpd of crude or 671.6 million barrels in the whole year. When multiplied by 365 days in the year, it means Nigeria is expected to raise over $43 billion as crude oil revenue in 2026 to finance the budget.
Crude Oil Market Competition
Experts estimate that if prices come down to $50 as targeted by Trump due to a Venezuelan supply glut, Nigeria could face a revenue shortfall of up to $10.24 billion (over N14 trillion).
The U.S. has historically been a major buyer of Nigerian crude. However, President Trump’s announcement that the U.S. will take control of Venezuelan oil for some time and import up to 50 million barrels in the coming months creates what some analysts describe as a “crowding out” effect. Nigeria exported approximately $2.86 billion worth of oil to the U.S. in the first nine months of 2025. There are fears that this oil revenue may drop if the U.S. pivots toward Venezuelan supplies.
Eight major oil producers of the Organisation of Petroleum Exporting Countries (OPEC), including Saudi Arabia, Russia, Iraq, the UAE, Kuwait, Kazakhstan, Algeria, and Oman, met on Sunday, January 4, and agreed on ensuring market stability. However, Emmanuel argued that OPEC no longer has the leverage to unilaterally bring down production so that prices could go up.
The expert observed that Trump wants lower crude oil prices because, going into the mid-term election in 2026, lower crude prices mean cheaper gas prices in America, which, to some extent, determines the outcome of the election.
READ ALSO: Venezuela to Export Up to $2 Billion in Oil to U.S. in Landmark Deal
Emmanuel, who predicted that crude oil prices might be in the region of $50 for most of 2026, urged the Nigerian government to figure out how it is going to balance the high unit cost per barrel with the budget benchmark that is above $60.
He said the only ray of hope is the expectation of a surge in non-oil revenue through tax reforms as the new tax laws take effect from January 2026.
Also, highlighting the economic implications of the development in Venezuela on Nigeria, financial analyst Kalu Aja, said if Venezuela (backed by the U.S.) decides to pump more oil, the global oil price would crash, and the $64 benchmark crude price for Nigeria in the 2026 budget might be unrealistic.
“Key for Nigeria now is oil supply; if the new leader of Venezuela (US-backed) decides to pump more oil, which they will, then the US will have achieved another aim of reducing global oil prices and pressuring Russia. So triple play.
“That $64 benchmark crude price for Nigeria in the 2026 budget now feels very generous; if Russia has a ceasefire in Ukraine, oil prices crash further,” Aja stated via his X handle.
A former chairman of the Chartered Institute of Bankers of Nigeria (CIBN), Prof. Segun Ajibola, also reechoed the view that a reduction in demand for Nigeria’s crude that may be triggered by increased supply from Venezuela could have a significant effect on the economy.
“At the current price of about $60.8 per barrel compared with Tinubu’s proposed $64.85, the situation is already becoming stressed. If a price war ensues, as could be triggered by increased supply from Venezuela, it will affect Nigeria’s projections for 2026,” Ajibola stated.
However, some economists argue that the immediate impact may be limited because Venezuela’s current production is very low and its infrastructure requires massive, long-term investment to recover.
Chief Executive Officer, Centre for the Promotion of Private Enterprise (CPPE), Dr Muda Yusuf, argued that the crisis in Venezuela would not have any significant impact on the global oil market, especially in the near term.
Yusuf stated that Venezuela’s current oil output is very low, contributing less than one per cent of global oil production, and for that, it does not command any influence in the global oil supply dynamics.
He maintained that the attack that led to Maduro’s capture did not damage Venezuela’s oil production infrastructure, and it will not affect oil output in the short term.
The economic expert, however, acknowledged that the country remains strategically significant in the long run because it holds one of the greatest proven oil reserves in the world.
Macroeconomic effect on Nigeria
Beyond the federal budget, the Venezuelan crisis could affect the Nigerian economy in several ways, including naira stability and Foreign Direct Investment (FDI). As oil remains Nigeria’s primary source of Foreign Exchange (FX), there are concerns that lower prices and reduced export volumes mean fewer dollars entering the economy, which could trigger another round of naira devaluation.
On the implication for FDI, some analysts expressed the view that if Venezuela becomes “derisked” under U.S. oversight, global oil majors (such as Chevron, ExxonMobil, etc.) may divert investment capital away from Nigeria’s aging infrastructure toward Venezuela’s massive, under-tapped reserves.
Victor Ezeja is a passionate journalist, scholar and analyst of socioeconomic issues in Nigeria and Africa. He is skilled in energy reporting, business and economy, and holds a master's degree in Mass Communication. He can be reached via @VICTOREZEJA on X
