OPEC+ Pauses Oil Supply Increases Through Q1 2026 Amid Venezuela Crisis

OPEC+ has paused its planned oil supply increases through the first quarter of 2026, maintaining current production levels while assessing market conditions and the potential implications of political developments in Venezuela. Market reaction has been muted, with Brent crude trading in the low $60s per barrel in early January, reflecting a global oil market shaped more by oversupply than geopolitical risk. US crude production remains above 13 million barrels per day, and OPEC+ output is elevated. Venezuela’s current output, estimated at 700,000–800,000 barrels per day, remains too small to materially alter near-term supply conditions, indicating that the decision is aimed at containing further price weakness rather than supporting a rebound.

Global Oil Production Distribution

CBN Projects 4.49% Growth and 12.94% Inflation in 2026

The Central Bank of Nigeria’s 2026 Macroeconomic Outlook projects real GDP growth of 4.49 percent and average inflation of 12.94 percent, underpinned by assumptions of relative foreign-exchange stability, improved oil-sector performance, easing food and energy prices, and the lagged effects of prior monetary tightening.

Indicators Comparison, Current vs Projections

The outlook assumes crude oil production of about 1.5 million barrels per day, a broadly stable exchange-rate environment, and gradual moderation in domestic price pressures as supply-side conditions improve. Nominal GDP is projected to exceed ₦690 trillion, while external reserves are expected to rise toward $51 billion, supported by oil receipts, remittances, and portfolio inflows.

These projections differ materially from the macro assumptions embedded in the 2026–2028 Medium-Term Expenditure Framework, which adopts a more conservative inflation assumption of 18 percent and reflects weaker revenue performance, higher financing needs, and elevated fiscal risks ahead of the election cycle. The monetary authority’s outlook is conditioned on sustained disinflation and improving supply conditions, while the fiscal framework places greater emphasis on execution risks, oil price uncertainty, and the inflationary implications of large domestic borrowing requirements. 

This gap has implications for budget credibility, medium-term planning, and debt sustainability, as realized macro-outcomes will determine whether fiscal pressures converge with or diverge from the CBN’s projected disinflation and growth path.

CBN Projects Current Account Surplus to Hit $18.81 Billion in 2026

Nigeria is expected to record a wider current account surplus in 2026, supported by improving external receipts and stronger transfer inflows, according to the Central Bank of Nigeria’s 2026 Macroeconomic Outlook. The surplus is estimated at $18.81 billion, equivalent to 11.16 percent of GDP, compared with an estimated $16.94 billion (10.94 percent of GDP) in 2025, reflecting a gradual strengthening of external balances.

Current Account Balance, 2019 to 2026

Export earnings are projected to rise to $58.26 billion in 2026, up from $54.59 billion in 2025, driven by improved oil-sector performance, modest expansion in non-oil exports, and stronger secondary income inflows. Diaspora remittances remain a critical anchor, with secondary income projected to increase to $26.13 billion in 2026, from $23.82 billion in 2025, reinforcing FX buffers alongside rising reserves.

However, the underlying structure of the surplus points to continued vulnerabilities. Total imports are projected to rise to $43.27 billion in 2026, from $39.92 billion in 2025, reflecting higher capital goods demand as domestic activity recovers. The services account deficit is expected to widen to $13.68 billion, compared with $12.80 billion in 2025, while the primary income account remains in deficit at $8.62 billion, driven by rising investment income payments to non-resident investors amid elevated domestic yields. These trends indicate that while the headline surplus supports near-term external stability and reduces immediate currency risk, it remains dependent on oil earnings, remittances, and portfolio-related flows rather than broad-based structural transformation. Sustaining external balance gains beyond 2026 will therefore depend on moderating import intensity, narrowing services deficits, and accelerating non-oil export capacity to reduce exposure to shifts in global risk sentiment.

Nigeria’s Private Sector Resilience Masks Underlying Structural Concerns

Nigeria’s PMI holding at 53.5 in December caps a remarkable thirteen-month expansion streak, but the stability conceals worrying trends. While headline growth appears robust, employment expanded at its slowest pace since June despite fourteen months of rising orders – signaling businesses are stretching existing capacity rather than creating jobs for Nigeria’s 5.74 million unemployed.

Headline PMI stood at 53.5 in Dec 2025, Sustaining Resilience in 2025

The divergence between strong demand and weak hiring reveals deeper structural issues. Companies are building inventories and expanding output through overtime rather than permanent employment, explaining why staff costs rose for “additional work” while headcount barely moved. This jobless growth pattern, amid 4% GDP expansion, highlights the economy’s inability to translate recovery into meaningful employment generation.

December’s inflationary uptick, though modest, signals vulnerability ahead. Manufacturing’s sharp price increases suggest producers are testing pricing power after months of restraint, potentially reigniting the inflation spiral that pushed rates above 30% earlier in 2025. With festive spending masking underlying demand weakness, January could reveal whether current growth is sustainable or merely seasonal exuberance.

The 59% business confidence appears disconnected from fundamentals – power outages still disrupt operations, material shortages persist, and backlogs are rising. The 3.8% growth projection for 2025 seems optimistic given these constraints. Unless infrastructure bottlenecks are addressed and employment meaningfully expands, Nigeria risks another year of growth that fails to improve living standards for most citizens.

Nigerian Stock Market Crosses ₦100 Trillion Capitalization

The Nigerian Exchange crossing ₦100 trillion market capitalisation on January 5, 2026, following a 1.74% single-day gain, and a 2.32% year-on-year growth. The surge is consistent with patterns typically associated with the classic “January Effect” driven by institutional rebalancing rather than economic optimism.

The market concentration risk is glaring. Just 14 firms control ₦48.35 trillion – nearly half the total capitalization. BUA Group alone accounts for ₦20.6 trillion, while Dangote entities contribute ₦11.3 trillion. This extreme concentration means a handful of stocks can influence the entire market, making the ₦100 trillion milestone more sensitive to movements in a small number of stocks than it appears.

More concerning is the disconnect between equity valuations and economic fundamentals. With CBN rates at 27%, credit to private sector below 20% of GDP, and manufacturing PMI barely expanding, the 51.19% return in 2025 reflects liquidity seeking yield rather than corporate earnings growth. Transaction volumes provide additional context: despite the market cap increase, total trading value fell 25.57% to ₦18.57 billion, suggesting limited depth in market participation beneath headline gains.

The sustainability question looms large. New tax laws effective January 1, 2026, will test whether this momentum will be sustained. Without meaningful IPOs, increased institutional depth, or real sector credit expansion, this milestone raises questions about whether another speculative peak rather than a foundation for capital market development.