Nigeria Missing Out on Oil Price Surge Benefits Due to Structural Weaknesses, Expert Says

Kelvin Emmanuel, Managing Partner of an Energy Consulting Practice, has argued that Nigeria is losing out on significant revenue gains from the current global surge in oil prices. He attributes this shortfall to deep-seated structural issues and weak policies within its petroleum sector, stating that the country is missing a crucial economic opportunity presented by geopolitical tensions.

During an interview with ARISE NEWS on Saturday, Emmanuel highlighted that Nigeria possesses a major opportunity but is not maximizing it. He emphasized that the current global climate, which should be yielding substantial fiscal gains, is instead marked by inefficiency and policy deficiencies.

"We’re wasting a good crisis," Emmanuel remarked, adding that "this crisis is coming to an end because there’s going to be a truce and things are going to normalise over the next 36 months." He posited that if Nigeria had a strategic petroleum reserve authority, it would have generated considerable revenue from trading.

Emmanuel critiqued Nigeria's inability to strategically position itself in the global oil market, noting the implications: "The implications for Nigeria is that typically we’re supposed to record like a quadruple of the revenues that the government was recording."

He explained that the widening difference between dated Brent and futures pricing indicates severe supply disruptions. "Nigeria is not profiting as much from this current war and the sharp increase in price for dated Brents, the crude oil budget benchmark for 2026 was $64.85. So you can imagine the premiums and the spreads that they are making in terms of profits."

Emmanuel elaborated on the distinction between dated Brent and futures Brent prices. "before there’s what is called dated Brent, and there’s what is called futures Brent, And that is also one of the reasons why you’ve seen that spread between dated Brent price, and the futures Brent price widening. What it simply means is that demand for spot cargoes has gone way higher than the supply for spot cargoes today."

He further noted that approximately 426 vessels carrying 172 million barrels of crude are currently stalled in the Straits of Hormuz, with about 13 million barrels of Middle Eastern crude offline daily. He reiterated that dated Brent represents the price for immediate cargo delivery, typically within a two-week window, whereas futures prices are for hedging over two to three months.

"So while you can see that on the ticker for futures, it’s trading at around $99, $104, $105, $106 a barrel, the spot price or the dated Brent price today is trading at $144.10," he stated.

Emmanuel criticized Nigeria's oil revenue structure, pointing out that pre- sold cargoes hinder the government's ability to benefit from price hikes. "Your futures cargoes are the cargoes that has been pre-sold. And the people who are benefiting from the current hike in price from Nigeria’s crude oil are the companies and banks that gave Nigeria loans, right, and are collecting crude oil back to repay, because the price at which these loans were collected is not up to $70 a barrel."

He also highlighted governance and institutional weaknesses within the oil sector. "NNPC is the concessionaire and is also a commercial operator that holds the oil and gas assets of the federal government of Nigeria. By FGN, I mean federal, state, and local governments, right? And they are responsible for revenue accretion. They are responsible for maximising the oil and gas potential of Nigeria, turning it into actual dollars."

"I’ll tell you that, first of all, the structure that we designed for our oil and gas sector is wrong. It is a structural flaw," he asserted, contrasting Nigeria's situation with Norway's. "So it’s a structural flaw that Norway’s first funding of its sovereign wealth fund was funded in 1990, Nigeria is borrowing to fund its budget and is not able to profit from hiking the crude oil price."

Emmanuel described the structural flaws further, explaining that any crude oil not committed in sale agreements goes to the excess crude account. "Steve, no family in Nigeria, no company works when you spend all your income. Nigeria spends everything it gets, it doesn’t only spend everything it gets, it goes ahead to borrow."

He lamented Nigeria's lack of a strategic petroleum reserve, emphasizing its importance for national security. "Because crude oil and gas, crude oil especially, storage especially is national security. Having crude oil saved is national security, because at times like this, it will save you. We don’t have the crude oil feedstock."

Regarding revenue management, Emmanuel argued that Nigeria has failed to establish systems for fully benefiting from economic windfalls. "whatever crude oil that is not committed in four sale agreements are going to go to the excess crude account that is under the authority of the Nigerian Economic Council. That account is a discretionary account because, you know, it’s not disclosed to the public. The governors can basically be invited to the state house for a NEC meeting. They sit down, they agree that they are going to, you know, draw money from ECA because of the new windfall, and they share the money, and nobody’s going to hear about it, and nobody can do anything about it."