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- US intervention in Venezuela may increase global oil supply, putting downward pressure on prices
- This is the view of a Kalu Aja, an economist who provided insights on implications fornoted the Nigerian economy
- Economist urges government preparation and revenue diversification to prepare for lower oil earnings
Kalu Aja, a Lagos-based economist, has warned that recent United States actions in Venezuela could have significant economic consequences for Nigeria.
He noted that the US taking control of Venezuela, which holds the world’s largest oil reserves, could increase global crude supply and push oil prices lower.
Photo: @FinPlanKaluAja1
Source: Facebook
In a post on X on Saturday, January 3, Aja described Washington’s move against the Venezuelan government as a calculated geopolitical strategy that takes advantage of Russia’s focus on the war in Ukraine.
“This is what you would call a double play. With Russia distracted in Ukraine, the United States is simultaneously neutralising Venezuela and Cuba, two key players in the Americas.”
He added that the main issue with Venezuelan President Nicolas Maduro was security, not oil.
Aja said:
“Allowing Hezbollah a foothold in the Americas crossed a clear US red line. Once that happened, his regime’s survival became unlikely.’
Venezuela, which holds the world’s largest proven oil reserves, has struggled under sanctions and declining production.
He added that Maduro reportedly offered oil concessions and renewed diplomatic engagement, but the US remained unconvinced.
Aja said recent “narco-boat” strikes were aimed at creating a legal case against Maduro, similar to the precedent used against former Panamanian leader Manuel Noriega.
He said.
“The Southern District of New York has already charged Maduro with drug offences.”
Cuba, which has long provided internal security support for Maduro, is also facing economic strain. “
Aja said:
“Cuba was Maduro’s protector; it ran his internal security forces. Cuba has now lost its source of cheap energy and foreign exchange. It can’t turn to Russia or Iran. It can turn to China, but will China risk its economy over Cuba?
“In closing, remember that all politics is local; this Venezuela action solidifies GOP support among key Cuban and Venezuelan voting blocs in America, in time for the midterms. This is also a Macro Rubio play for 2028,”
How is Nigeria affected and Tinubu’s budget plan?
For Nigeria, Africa’s largest oil producer, the main impact is likely to come through oil supply and pricing.
Kalu explained:
“Key for Nigeria now is oil supply; if the new leader of Venezuela (US-backed) decides to pump more oil, which they will, then the US will have achieved another aim of reducing global oil prices and pressuring Russia. So triple play”
He warned that Nigeria’s 2026 budget, which assumes $64 per barrel crude, may now be overly optimistic. If Russia reaches a ceasefire with Ukraine, oil prices could fall further.
President Bola Tinubu recently presented 2026 budget plan of N58.18 trillion. Crude oil remains a major source of revenue, with a $64 benchmark set to fund the budget, and if oil prices fall, it could deal a major blow to Nigeria.
Aja expressed concerns:
“That $64 benchmark crude price for Nigeria in the 2026 budget now feels very generous; if Russia has a ceasefire in Ukraine, oil prices crash further. Nigeria has to adopt an austerity budget now, in preparation.”
Photo: Bloomberg
Source: Getty Images
US buys Nigerian crude oil
Meanwhile, Nigeria shipped 33.23 million barrels of crude oil to the United States valued at $2.57 billion during the first eight months of 2025, the US Mission in Nigeria has disclosed.
It stated this on its official X handle, underscoring the West African country’s pivotal role in the transatlantic energy market and consolidating Nigeria’s position as Africa’s foremost oil producer.
According to the mission’s statement, Nigeria’s crude oil shipments to America accounted for more than half of all African exports to the US in January-August, reinforcing the strategic energy partnership between both nations.
The US Mission stated:
“Nigeria was the leading African exporter of crude oil to the United States between January and August 2025, shipping 33.23 million barrels worth $2.57 billion. That’s more than half of all,to the United States during that period.”
FG opens portal for oil blocks licence
Earlier, Legit.ng reported that the federal government has reduced the signature bonus for the 2025 oil licensing round from the previously approved $10 million to a new range of $3 million to $7 million.
The move is targeted at lowering entry barriers and attracting fresh investment into Nigeria’s upstream sector.
According to the regulator, prospective investors bidding for oil blocks will now be required to submit signature bonus offers.
Source: Legit.ng
