…As crude oil contracts extend losing streak on US-Iran optimism
By Dickson Pat
Nigeria’s oil sector contributed 3.92% to the country’s total real Gross Domestic Product ,GDP, in the first quarter of 2026, reflecting a slight decline from the corresponding period of 2025 despite improved growth in the sector.
This was contained in the latest figures released by the National Bureau of Statistics, yesterday.
According to the report, Nigeria’s economy recorded a real Gross Domestic Product ,GDP, growth of 3.89% year-on-year in the first quarter of 2026, marking an improvement over the 3.13% recorded in the corresponding period of 2025.
The NBS data showed that the oil sector posted stronger year-on-year growth in the first quarter of 2026 compared to the same period last year.
“The real growth of the oil sector was 2.57 year-on-year in Q1 2026, indicating an increase of 0.70% points relative to the rate recorded in the corresponding quarter of 2025 ,1.87%”.
However, the sector’s performance slowed when compared to the previous quarter, although quarter-on-quarter growth remained positive at 9.31% in Q1 2026.
The report also showed that the oil sector’s contribution to the country’s real GDP declined slightly on a year-on-year basis, though it improved compared to the preceding quarter.
“The Oil sector contributed 3.92% to the total real GDP in Q1 2026, down from the figure recorded in the corresponding period of 2025 at 3.97% and up from the preceding quarter, where it contributed 2.87%”.
The NBS further disclosed that Nigeria recorded an average daily oil production of 1.55 million barrels per day (mbpd) in the first quarter of 2026, lower than the 1.62 mbpd recorded in the same quarter of 2025 and below the 1.58 mbpd produced in Q4 2025.
The report showed that the country’s GDP growth in the first quarter was largely supported by agriculture, industry, and services activities, with agriculture recording improved performance compared to the same period last year.
“The growth of the industry sector stood at 3.50% from 3.42% recorded in the first quarter of 2025, while the services sector recorded a growth of 4.31% from 4.33% in the same quarter of 2025″.
The services sector remained the biggest contributor to Nigeria’s economy during the quarter under review.
“In terms of share of the GDP, the services sector contributed more to the aggregate GDP in the first quarter of 2026 at 57.73% compared to the corresponding quarter of 2025 at 57.50%”.
The non-oil sector also maintained its dominance in the economy, contributing 96.08% to real GDP in Q1 2026, driven mainly by telecommunications, crop production, trade, manufacturing, financial institutions, real estate, construction, and transportation.
The latest GDP figures come amid growing concerns over Nigeria’s medium-term growth outlook following weaker global economic projections and ongoing geopolitical tensions linked to the Middle East crisis.
Earlier in April, the International Monetary Fund cut Nigeria’s economic growth forecast for 2026 by 0.3 percentage points to 4.1% from an earlier projection of 4.4%, citing mounting global and domestic pressures.
The IMF disclosed this during a media briefing for the launch of its April 2026 Global Financial Stability Report.
The Fund also projected a broader slowdown in global growth, forecasting world output to decline from 3.4% in 2025 to 3.1% in 2026 before recovering slightly to 3.2% in 2027.
It is believed that prolonged instability in the Middle East could further impact crude oil prices, energy markets, inflation, and trade flows, with implications for oil-dependent economies such as Nigeria.
Meanwhile, Nigerian crude and major oil contracts continue their losing streak for the fourth day in a row, falling by almost 6% and trading at about $105 per barrel.
Crude oil prices decline as easing supply concerns boost optimism over a possible US-Iran agreement.
According to a US official quoted by Axios, an agreement involving a 60-day extension of the ceasefire between the US and Iran is about to be signed.
Iran would agree to remove the mines it placed in the Strait of Hormuz and permit ships to travel freely as part of the proposed agreement, which would also reopen the waterway.
The United States would end its current blockade of Iranian ports in return for these measures.
President Trump posted on social media that he had advised his representatives “not to rush into a deal”, which somewhat dampened hopes for a deal.
The agreement would not be signed on Sunday, a senior US administration official added, even though progress had been made.
The agreement would see Iran give up its enriched uranium, reopen the Strait of Hormuz, and put an end to the conflict. The agreement would begin with a 60-day extension of the ceasefire, during which time nuclear talks would continue, and traffic through the Strait would resume.
If a deal is reached, the number of ships passing through the Strait could return to pre-war levels in 30 days, according to Iranian news agency Tasnim.
Israeli Prime Minister, Benyamin Netanyahu stressed that “any final agreement with Iran must eliminate the nuclear danger” even though the agreement would end the conflict between Israel and Hezbollah, Esmai, the Iranian Ministry of Foreign Affairs spokesperson said.
About one-fifth of the world’s oil and liquefied natural gas travels through the Strait of Hormuz, which would be reopened, greatly easing the strain on major Asian economies and causing oil prices to drop sharply.
Earlier, the conflict and a double blockade severely disrupted energy markets, causing Middle Eastern producers to shut down millions of barrels of crude output per day.
However, according to Reuters, citing Iran’s Tasnim news agency, the US government is still blocking some sections of the deal to end the conflict, including the release of blocked Iranian assets.
US Secretary of State, Marco Rubio, highlighted that while there was regional support for an agreement with Iran, a comprehensive nuclear deal was not something that could be done quickly or carelessly. The structural forces driving Nigerian crude now are a combination of an external pricing bonanza and internal supply constraints.
The extra N5.13 trillion in windfall revenue from market prices averaging around $110 has enabled Nigeria to pay down domestic debt, defend the Naira (stabilizing around N1,365/$ – N1,375/$), and build a fiscal buffer.
Upstream recovery is picking up, but it continues to battle legacy infrastructure challenges, with production rising to an average of 1.49 million per day in Q2 (compared to roughly 1.35 million per day in Q1) and still below its OPEC+ quota of 1.50 million per day and internal 2026 budget target of 1.84 million barrels per day.
