Exactly 55 years ago this month, Nigeria joined Organization of Petroleum Exporting countries, OPEC, the global club using collective action to seek global production versus price equilibrium, in response to major consumer countries perceived to have overplayed their hand. Coincidentally, Nigeria’s oil sector reached a significant milestone this year, achieving and surpassing its OPEC production quota for the second month in May and June. According to OPEC’s July 2025 Monthly Oil Market Report, Nigeria’s average daily crude oil production reached 1.505 million barrels per day (bpd) in June 2025, a 3.6% increase from May and the highest level since January, and more than 15% growth.
This achievement comes after years of underperformance due to oil theft, sabotage, and under-investment. Besides the Covid period when every member had to swallow a deep cut to help shore up global oil prices which had collapsed to zero at some point, Nigeria has had its quota reduced several times in response to its own production reversals. Below are recent instances of Nigeria’s OPEC quota cuts, and the reasons.
Nigeria’s Production in Context
The latest OPEC data shows Nigeria firmly remains Africa’s leading oil producer, with Algeria a distant second at 927,000 bpd in June 2025. This production surge underscores Nigeria’s improved security, investment climate, and operational efficiency. It’s also a strategic outcome of the clarity coming through now 4-year-old Petroleum Industry Act, and the recent ascendancy of capable locally led producers who are better sweating the divested assets of the international oil companies.
To provide a regional and global perspective, the table below compares Nigeria’s output growth with total OPEC+ production and five peer OPEC members – Angola, Algeria, Iraq, Saudi Arabia, and the United Arab Emirates – over the past 12 months:
The Quota Cap Challenge
The years of low production gave rise to OPEC reducing Nigeria’s quota, currently standing at 1.5 million barrels per day, understandably, as the group sought to shore up global prices by controlling volumes, especially in the years during and after the pandemic eroded demand and prices. Despite the recent surge in the country’s production volumes, Nigeria’s ambition to secure a higher OPEC quota faces headwinds. OPEC’s primary concern remains global market stability, and the group has been understandably restrained to grant quota increases to individual members. A further reason for the hesitation is the softening global demand, a fallout of trade tariffs still unfolding. On July 6, 2025, OPEC+ agreed to a modest production increase of 548,000 bpd for August for the entire group, but Nigeria’s quota remains unchanged. It will take deft diplomacy to change that by any margin close to the steep pace of Nigeria’s ramp up, among the highest in recent years.
Nigeria is already taking soundings within the group for a possible 25% increase on its 1.5mbpd quota by 2027, by which time a lot could change in the global economy and commodity markets, in any direction. Part of the rationales Nigeria is putting forward are increased local refining capacity and previously constrained production. There is also the economic recovery projected as a medium-term outcome of subsidy removal and streamlining of taxes to ease business and unburden small enterprises.
Read also: $17.4trn global upstream investment required in five yrs to avoid market deficit – OPEC
Policy Recommendations for 2025–2027
With a quota review unlikely before 2027 at the scale Nigeria seeks, due to OPEC’s rigorous review process, Nigeria should focus on bridging strategies to manage compliance, and sustain production growth, a critical consideration for OPEC upward quota adjustment, or risk losing the gains of its production ramp-up, or even a reversal. There is also a risk of upsetting the equilibrium of influence and the price-volume balancing mechanism which the country helped build within OPEC, at this time of global trade and economic volatility, if the quest is not well managed. But there are levers worth considering.
Maximize Domestic Refining:
Accelerate the operational ramp-up of the Dangote refinery and other local plants to absorb more crude domestically, reducing reliance on exports and OPEC quotas. One way to do this is consider a 2–3-year special package of incentives for local refiners, combining fiscal concessions tied to actual refined volumes and feedstock allocation that cannot be exported either as crude or refined products.
Deepen Sector Reforms:
Fully implement the Petroleum Industry Act (PIA) to attract investment, improve transparency, and ensure stability in the sector. Three years on, certain potentially stimulating elements and intents of the act have not been implemented, and some are running into bureaucratic long grass and resistance and need to be unblocked. Examples are the Domestic Supply Obligation, licensing transparency and infrastructure investment stimulation to evacuation, and community investment provisions. Some recent executive orders have helped, but more push and consequence are needed.
Speed up Diversifying the Economy:
Intensify efforts to grow non-oil sectors—such as agriculture, manufacturing, and technology—to reduce fiscal dependence on oil exports. There’s also a case to infuse practicality into the current policy push to increase development and use of Nigeria’s considerable gas reserves. While Nigeria is also a member of Gas Exporting Countries Forum (GECF, the gas equivalent of OPEC), the organization does not impose quotas as the pressure on that commodity is not nearly as much as for oil. So, it’s all freeway for Nigeria to earn revenue and grow its economy by unrestrained growth of gas commercialization, export, and domestic use.
Sustain Security and Infrastructure Gains:
Continue investments in pipeline security and community engagement to maintain production levels and prevent setbacks from unaccounted volume loss. Equally important on this score is encouraging the early wins of the emergent indigenous producing companies through affirmative regulation and calibrated fiscal incentives. One quick win for them would be ease of doing business if for instance, if government streamlines the multiple inspection agencies at point of loading which pile up cost and delay. Same if the tax consolidation intended in the new tax laws taking effect from January 2026, is specifically accelerated for indigenous oil producers and refiners.
Strengthen OPEC Diplomacy:
Engage proactively with OPEC partners, leveraging improved compliance and production data to build a strong case for a higher quota at the next review. Nigeria has had an outsized presence in OPEC since it joined in July 1971. Off-cycle engagement of allies within OPEC can help secure support for quota lift in good time and proportion. Nigeria has produced outstanding leaders of OPEC, like Rilwanu Lukman’s long years as secretary General and president, and more recently, the late Sanusi Barkindo serving as Secretary General for over 5 years including steadying the waters post covid with the signing of the Declaration of Cooperation a product of necessity that created a more influential OPEC+. Such leadership influence enabled cohesion in the body. Now the country needs to draw on that history of service, influence and goodwill among peers and allies. Nigeria’s Demola Adeyemi-Bero is the current Chairman of the OPEC Board of Governors, in addition to the statutory representation at the OPEC Ministerial meetings by the Minister of State Heineken Lokpobiri. These roles and history of influence need to be fully leveraged.
Policy Virtuous Cycle:
Incidentally, some policy options available to Nigeria could reinforce each other with potential positive effect on the local economy. For instance, incentivized refining that must be sold in the domestic market drives down the local fuel price, reducing transportation costs, tamping down inflation, stimulating economic activity which further stimulates demand. This is the sort of domestic momentum that enabled Brazil to become a medium industrial powerhouse, sustaining a steady $10,000 per capita GDP by balancing export of crude with a robust domestic refined products market, supplemented with a modest import, and a strong domestic gas market.
Looking Ahead
During the trying days of the covid crises, with Barkindo as OPEC president, Nigeria played an outstanding role in rallying cooperation by non-member big producers like Russia and US, resulting in what is now known as OPEC+ with more convening power. If managed strategically, Nigeria’s successful lobby can help revalidate OPEC’s role as a moderating influence on the global economy, tempering oil price, energy costs, and inflation while stimulating trade and investment, especially for more vulnerable economies and populations.
Nigeria’s recent production gains have restored its credibility within OPEC and revalidated its position it as Africa’s oil leader. By focusing on sustained value addition, reforms, economic diversification, deft diplomacy, and deliberate policy of using oil to fuel economic activity locally, Nigeria can maximize the benefits of its current recovery while preparing for a likely quota increase and a more influential role in OPEC by 2027, or sooner.
Dr. Arinze is an energy policy and investment specialist, author, and patent holder.
