Why Analysts See a “Super Glut” Capping Seplat and Aradel Upside

Market sentiment for Nigeria’s upstream energy giants, Seplat Energy and Aradel Holdings, is shifting toward a “cautious” outlook for 2026.

Despite a stellar 2025, analysts warn that a looming global oil supply glut could pressure share prices on the Nigerian Exchange (NGX) as crude benchmarks test lower support levels.

Operators in the energy sector could emerge as underperformers on the NGXASI index this year as oil prices are on track for the sharpest drop since Covid-19 caused by a torrent of non-OPEC supply and a tepid demand.

The vagaries of the international market means the earnings, cash flow, and capital expenditure spending (CAPEX) of Seplat Energy Plc, Oando Plc, and Aradel Holdings Plc- the three largest exploration firms- will be under pressure, and the implications are that investors will not be buying into the future earnings of these firms.

Last year, US benchmark West Texas Intermediate crude oil futures were trading around $58 a barrel, down nearly 20% for the year. Meanwhile, Brent crude futures were around $61 a barrel.

There has been a slight rise in price as  the protest in Iran, one of the biggest oil producers in the Middle East, disrupted supply.

Both the WTI and Brent benchmarks traded about 0.7% higher as of 8:05 a.m. ET, as the market assessed potential risks to supply from the ongoing unrest in Iran.

The U.S. benchmark crude futures, West Texas Intermediate (WTI), were up by 1.36 percent to trade at $59.12 per barrel, while the international benchmark, Brent, was up by 0.71 percent to $63.34.

Geopolitical development that has significant impact on demand-supply dynamics stems from fear over oversupply of the product as the Organisation of Exporting Countries and its allies (OPEC+) have been increasing output, while United States’ shale oil producers and other suppliers who are not among the 12 member cartel have been magnifying barrels

There are indications that China and India, one of the world’s largest importers of the product, have been stockpiling crude oil and refining it for future sale.

Compounding the woes of exporters is the malignant Western sanctions on Russia over its war against Ukraine that saw discount on its oil sold at terminal climb to historic highs.

According to the International Energy Agency, the market is likely to be oversupplied by more than 3 million barrels per day in 2026,

In a pessimistic tone, some on Wall Street have warned of prices on West Texas Intermediate crude, the US benchmark, falling to the $30 per barrel range next year if measures aren’t taken to curtail supply.

Oil firms to feel the pang of oversupply

If crude oil prices fall to around $30 per barrel, it will have negative impact on indigenous oil and gas firms like Seplat.

The Energy sector was the market’s weakest performer in 2025, with all companies underperforming the NGXASI index.

So far this year, sector players’ shares have been rising as Seplat, Aradel, and Oando, shares have returned +6.34 percent, +8.06 percent, and +1.37 percent respectively.

These three firms sit on a cash pile of N2.05 trillion in the first nine months of 2025, which is 107.14 percent higher than 2024’s N993.35 billion, according to data gathered by MoneyCentral.

It is interesting to note that Seplat, Aradel, and Oando need higher oil prices, so they can reduce a combined total debt of N4.42 trillion and as they have a cumulative capital expenditure of N469.80 billion.

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