NESG Sees Higher Oil Production, Prices Supporting Nigeria’s Fiscal Outlook

NESG Projects Nigeria’s Oil Output Above 1.7mbpd in Second Half of 2026

Nigeria’s crude oil production could exceed 1.7 million barrels per day (mbpd) in the second half of 2026, while stronger crude prices could provide additional fiscal relief for the Federal Government, according to the Nigeria Economic Summit Group’s (NESG) 2026 Half-Year Outlook Report.

The projection reflects expectations of improved oil-sector fundamentals, including reduced crude theft, better pipeline security and renewed upstream investment following the resumption of oil block licensing.

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NESG Projects Higher Oil Production

NESG expects Nigeria’s oil output to rise above 1.7mbpd during the second half of the year.

The projected increase would represent further progress in restoring the country’s crude production capacity, although it would remain below the 2026 Federal Government budget assumption of 1.84mbpd.

Nigeria has already recorded an improvement in production compared with the beginning of the year. OPEC data show that average crude output increased from 1.388mbpd in the first quarter of 2026 to 1.525mbpd in the second quarter.

However, production fell to 1.505mbpd in July from 1.555mbpd in June, although the country remained above the 1.5mbpd threshold for a third consecutive month.

Higher Oil Prices Could Provide Fiscal Relief

Beyond production growth, NESG expects crude oil prices to support Nigeria’s fiscal position during the second half of the year.

Under its baseline scenario, the group projects international crude prices will average between $70 and $80 per barrel in H2 2026. This range remains above the Federal Government’s 2026 budget benchmark of $64.85 per barrel.

NESG also said crude prices could rise above $100 per barrel if geopolitical tensions in the Gulf region intensify and disrupt global oil supplies.

For Nigeria, higher prices combined with increased production could raise government oil revenues and create additional fiscal space.

Security Remains Critical to Production Growth

The expected production increase depends partly on improvements in security across oil-producing areas.

NESG identified reduced crude theft and enhanced pipeline security among the factors supporting its more positive outlook for the sector.

Persistent theft, pipeline vandalism and operational disruptions have historically constrained Nigeria’s ability to maximise production from its oil assets.

A sustained improvement in security would allow producers to operate more consistently and could support increased investment in upstream projects.

Upstream Investment Could Strengthen Output

Renewed upstream investment is another factor behind NESG’s projection.

The resumption of oil block licensing could encourage additional exploration and development activity, potentially improving Nigeria’s production capacity over the medium term.

For the country to consistently reach and exceed 1.7mbpd, however, investment will need to translate into actual production rather than remain concentrated at the licensing and development stages.

This makes regulatory certainty, infrastructure, security and efficient project execution important to the sector’s outlook.

Nigeria Remains Exposed to Global Oil Markets

NESG cautioned that global developments will remain important to Nigeria’s economic performance during the second half of 2026.

As a major net oil exporter, Nigeria stands to benefit when crude prices rise, particularly when higher prices result from supply disruptions elsewhere.

However, dependence on crude revenue also exposes government finances and foreign-exchange earnings to fluctuations in international oil prices.

The outlook therefore presents both an opportunity for fiscal improvement and a reminder of Nigeria’s continued exposure to developments in the global energy market.

Implications for Government Revenue

Higher production and prices could strengthen government revenue if Nigeria can effectively capture the additional proceeds.

Improved oil earnings could provide more room for government spending on infrastructure, social programmes and other capital projects while potentially reducing pressure on public finances.

The impact will ultimately depend on production levels, realised crude prices, operating costs and the government's ability to improve revenue collection across the petroleum value chain.

Implications for Housing and Infrastructure

The projected improvement in oil revenues could have wider implications for Nigeria’s housing and infrastructure sectors.

Greater fiscal space could give government more capacity to fund infrastructure, including roads, transport networks, drainage, water systems and other public facilities that support housing development.

Infrastructure investment can also improve the attractiveness of emerging residential and commercial locations by increasing connectivity and access to essential services.

For the housing sector, however, the benefits will depend on how much additional oil revenue reaches productive capital expenditure. Higher crude earnings alone will not automatically translate into increased housing supply or improved affordability.

Outlook

NESG’s projection that Nigeria’s oil output could exceed 1.7mbpd in H2 2026 offers a positive outlook for the country’s petroleum sector and public finances.

The combination of higher production and crude prices above the 2026 budget benchmark could provide additional fiscal space.

The key test will be whether Nigeria can sustain production gains through improved security, upstream investment and stronger operational efficiency while managing its exposure to oil-price volatility.

For the broader economy, sustained improvement in oil revenues could support government spending and infrastructure delivery, with potential benefits for housing and real estate if additional fiscal resources are channelled towards productive development

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