Norway lifts oil revenue forecast as war-driven prices boost exports

Norway lifted its 2026 oil and gas revenue forecast to 721.1 billion crowns, about $78.71 billion, from an initial 557.4 billion crowns, underscoring how the Iran war has inflated energy prices and swollen export earnings. The jump gives the state a bigger fiscal cushion, but it also sharpens a familiar Norwegian contradiction: the country’s green image now rests on a cash flow from the fossil fuels it says it must eventually move beyond.

The government said the extra money should largely be kept out of the domestic economy and sent into the Government Pension Fund Global, the sovereign wealth fund that has grown to about $2.2 trillion. In the revised 2026 budget, spending of fund revenues was set at 579 billion kroner, equal to 2.7% of the fund’s value and 4.9 billion kroner below the adopted budget. Officials said the budget programme would have a neutral effect on the Norwegian economy, a sign that Oslo is trying to capture the windfall without adding fuel to inflation.

That restraint reflected the pressure already building inside the economy. Norges Bank raised its policy rate by 25 basis points to 4.25% on May 7, saying twelve-month consumer inflation was 3.6% in March and CPI-ATE inflation, which strips out tax changes and energy prices, was 3%. The central bank cited strong wage growth in manufacturing, an appreciated krone and pressure from energy prices. The finance ministry also cut its forecast for non-oil GDP growth to 1.7% from 2.1%, blaming weaker prospects on the fallout from the war.

The broader budget figures show how tightly Norway is still tied to its petroleum sector. The government’s original 2026 budget projected mainland GDP growth of 2.1%, CPI inflation of 2.2% and CPI-ATE of 2.5%, while fund spending was set at 2.8% of the sovereign wealth fund’s value. Parliament will still have to negotiate the final budget because the minority Labour government lacks a secure majority.

The energy stakes are not abstract. The Norwegian continental shelf supplied about 30% of gas consumption and 14% of oil consumption in the EU and the UK, while total petroleum production in 2025 was about 239 million standard cubic meters of oil equivalents. Oil output reached about 107 million Sm3, the highest since 2009, helped by the Johan Castberg field in the Barents Sea, and petroleum investment is estimated at around 283 billion kroner in 2026. The state’s net cash flow from petroleum activities was estimated at 664 billion kroner in 2025 and 521 billion kroner in 2026, a reminder that Norway is still financing its transition strategy with the profits of the old one.