S&P Upgrades Nigeria to ‘B’ on Oil Gains, Dangote Refinery, FX Reforms

S&P Global Ratings has upgraded Nigeria’s long-term foreign and local currency sovereign credit ratings to ‘B’ from ‘B-’, citing an improved macroeconomic profile powered by higher oil production, stronger crude prices, a surge in domestic refining capacity, and the government’s exchange-rate liberalization reforms. 

The agency affirmed on Friday Nigeria’s ‘B’ short-term rating and assigned a stable outlook. It also raised Nigeria’s national scale ratings to ‘ngA+/ngA-1’ from ‘ngBBB+/ngA-2’.

S&P said Nigeria’s creditworthiness has strengthened after three years of structural reforms, highlighting the 2023 exchange-rate liberalization as a key shift that improved access to foreign currency, supported a more market-driven exchange rate, and helped boost confidence while supporting non-oil economic activity.

It also pointed to rising fiscal revenue as a share of GDP, driven by tax reforms and higher transfers of petroleum revenue to the federal government following Executive Order 9, which directs the Nigerian National Petroleum Company to remit a larger share of revenue to the federation account.

Oil at $100 and Dangote refinery lift external buffers

S&P raised its Brent simulated $78.71 ▲0.27% oil assumption to $100 per barrel for the rest of 2026, reflecting ongoing disruption tied to the effective closure of the Strait of Hormuz.

Nigeria’s oil production is expected to average about 1.66 million barrels per day in 2026 (including condensates), supported by improved security in the Niger Delta that has helped curb oil theft.

The ratings firm also underscored the impact of increased domestic refining, saying Dangote Industries’ 650,000 bpd refinery has ramped up to near full capacity. S&P expects refining expansion and stronger oil receipts to improve Nigeria’s external position, projecting the current account surplus will rise to 5.8% of GDP in 2026**, from 4.8% in 20

Fiscal pressures remain, despite improving debt metrics

S&P expects Nigeria’s general government deficit to widen to above 4% of GDP on average in 2026 and 2027, but said reforms to broaden the tax base from “very narrow levels” are helping reduce strain on public finances.

The agency forecast Nigeria’s debt-to-revenue ratio will decline to 338% in 2026, down sharply from 500% in 2023, as revenue improves and interest burdens ease relative to government income.

The government’s decision to rule out reintroducing subsidies on refined petroleum products was cited as a supportive policy stance aimed at avoiding larger deficits and renewed pressure on foreign exchange liquidity.

Fuel prices and elections pose risks

S&P cautioned that domestic refining is unlikely to relieve pressure on consumer fuel prices, since domestic production jpump prices are now driven by global trends after subsidy removal. It noted multiple fuel and diesel price increases since the Middle East conflict escalated in February 2026, adding to inflation pressures.

With general elections less than a year away, S&P said rising fuel costs are weighing on inflation and could complicate budget management.