Oil Prices Rise Above Budget Benchmark as Naira, Reserves Gain Momentum
- Brent crude rose to $69.34 per barrel, above Nigeria’s 2026 budget benchmark of $64.8
- The naira appreciated below N1,400/$1 at the official market for the first time in over a year
- Nigeria’s external reserves increased to over $46 billion, the highest level in about eight years
Oluwatobi Odeyinka is a business editor at Legit.ng, covering energy, the money market, technology and macroeconomic trends in Nigeria.
Brent crude traded above Nigeria’s 2026 budget benchmark of $64.8 per barrel on Thursday, a development analysts say could strengthen the country’s fiscal position, boost foreign exchange reserves and support exchange rate stability.
Brent crude futures climbed 94 cents, or 1.4 per cent, to $69.34 per barrel, while US West Texas Intermediate (WTI) rose 1.5 per cent to $64.13. The rally extended gains for a third consecutive day amid concerns that the United States could take military action against Iran, potentially disrupting oil supplies from the Middle East.
Source: UGC
Market analysts noted that a full-scale conflict affecting the Strait of Hormuz (a critical route for about 20 per cent of global oil flows) could push Brent prices to as high as $91 or even $150 per barrel within weeks, Vanguard reported.
The price increase comes as Nigeria continues to consolidate gains in the foreign exchange market following reforms introduced by the Governor of the Central Bank of Nigeria (CBN), Olayemi Cardoso.
Naira strengthens across markets
Data from the CBN showed that the Nigerian Foreign Exchange Market (NFEM) rate appreciated to N1,396.99/$1 on Thursday from N1,400.48/$1 the previous day. The move marks the first time in over a year that the naira has traded below the N1,400/$1 threshold on the official market.
The currency had traded as weak as N1,422.07/$1 and N1,421.63/$1 in late January before gradually strengthening in subsequent sessions.
At the parallel market, the naira also gained. According to Cowry Asset Management Limited, the currency appreciated by 1.06 per cent to N1,454/$, reflecting improved sentiment across both official and informal segments.
President of the Association of Bureaux De Change Operators of Nigeria (ABCON), Aminu Gwadabe, said the naira has remained relatively stable in recent months, ending years of volatility.
Managing Director of Financial Derivatives Company, Bismarck Rewane, estimated the fair value of the naira at about N1,257/$ based on purchasing power parity (PPP). Speaking at the 2026 Economic Outlook organised by the Association of Corporate Treasurers of Nigeria (ACTN), Rewane said the currency is currently undervalued by roughly 11 per cent.
He noted that exchange rates typically converge towards PPP-implied levels over a five-year period.
Charlie Robertson, author of The Time Travelling Economist, also observed that a weaker US dollar has supported African currencies, including the naira.
External reserves hit multi-year high
Nigeria’s external reserves have continued to rise, crossing the $46 billion mark for the first time in about eight years.
CBN data showed that reserves increased by $5.82 billion, or 14.45 per cent, to $46.11 billion as of January 28, 2026, up from $40.29 billion recorded in December 2024. Within the first 22 days of January alone, reserves rose by about $510 million.
Industry data indicate that reserves were last at a similar level in August 2018.
Analysts said the reserve build-up strengthens Nigeria’s import cover and enhances currency stability, particularly as the country approaches a general election year. However, they cautioned that sustaining the momentum will depend on continued fiscal discipline.
Foreign inflows and reforms support outlook
Foreign capital inflows reached $20.98 billion in the first 10 months of 2025, representing a 70 per cent increase over total inflows for 2024 and a 428 per cent jump compared to 2023.
Cardoso said the gap between official and parallel exchange rates has narrowed to under two per cent from more than 60 per cent previously, while the naira now trades within a relatively stable band.
He added that Nigeria’s current account surplus rose by over 85 per cent to $5.28 billion in the second quarter of 2025, supported by improved non-oil exports and stronger foreign exchange management.
Source: Facebook
BDCs raise concerns over CBN policy
Legit.ng earlier reported that Bureau de Change (BDC) operators say they have yet to access the official foreign exchange window announced by the Central Bank of Nigeria (CBN).
The apex bank had previously issued a circular allowing licensed BDCs to access foreign exchange through authorised dealers at the prevailing market rate. Under the directive, each BDC is permitted to purchase up to $150,000 weekly, subject to Know Your Customer (KYC) requirements and due diligence checks.
Despite the policy announcement, many operators said the directive remains largely unimplemented, citing multiple reasons.
Source: Legit.ng
