Nigeria’s oil output has fallen as global prices rise on the back of escalating Iran-Israel tensions.
Data from the Nigerian Upstream Petroleum Regulatory Commission (NUPRC) showed that the country’s crude production fell by 5.57 percent between January and May 2025.
The nation’s production fluctuated through the first five months of the year, with output at 1.539 million barrels per day (bpd) in January, 1.465 million bpd in February, 1.401 million bpd in March, 1.486 million bpd in April, and 1.45 million bpd in May.
This development also indicated that Nigeria has failed to meet the Organization of Petroleum Exporting Countries’ quota for four consecutive months after reaching the milestone last December and in January 2025.
Further analysis showed that with blended and unblended condensates, Nigeria’s total output in May reached 1.66 million bpd, according to the upstream regulator. However, OPEC does not include condensates in its quotas for member states.
According to the regulatory commission, the lowest and peak combined crude oil and condensate production in May were 1.61 million bpd and 1.810 million bpd, respectively.
“The daily average production in May was 1,657,435 barrels per day, comprising of both Crude oil (1,452,941 bopd) and condensate (204,493 bopd) 3. The average crude oll production was 97% of OPEC quota (1.5 mbpd),” the regulator stated.
Last week, Heineken Lokpobiri, minister of state for petroleum resources (oil), stated that the federal government is working to attract investment in the sector.
According to him, the government and Yinson Offshore Production are in talks to make further investments in the sector’s offshore operations. “I received Mr. Flemming Grønnegaard, CEO of Yinson Offshore Production, as we engaged in meaningful discussions on further investments in our offshore operations.”
Read also: Nigeria’s oil output records third decline in 2025, misses OPEC quota
Rising oil prices
Oil prices were over $70 per barrel on Monday at 8.15pm, which was below the budget benchmark of $75 per barrel. Despite that, analysts say the Israel-Iran tensions would further rev up prices.
The most immediate consequence of the hostilities in the Middle East was a sharp spike in global oil prices, with Brent crude jumping over 4 percent from $69.36 to $74.23 per barrel last week. For Nigeria, this surge offered a precarious and temporary reprieve.
For context, the Nigerian government anchored its budget on a benchmark oil price of $75 per barrel and an ambitious production target of 2.06 million barrels per day.
In its latest report, SB Morgen cautioned that Nigeria’s capacity to benefit from the upswing remains significantly constrained by structural weaknesses. The nature of Nigeria’s crude sales further complicates its inability to fully enjoy the benefits of rising prices.
“Higher prices don’t automatically translate into higher revenues for Nigeria due to production underperformance and long-term contracts that are locked in at lower prices,” SB Morgen stated.
Much of Nigeria’s output is committed through forward contracts or swaps, often priced below current market rates. These contracts were initially designed to provide revenue stability, but are now working against Nigeria’s interests during periods of market volatility.
While other oil-producing nations with strong refining infrastructure such as Saudi Arabia and India are poised to earn more by exporting refined products or meeting domestic needs at lower costs, Nigeria’s oil output keeps getting low.
Read also: Oil extends gain as Israel-Iran conflict stokes supply concerns
Nigeria’s backward steps
“Nigeria is taking two steps forward and two steps back, and it need not be,” Jide Pratt, COO of Aiona, told BusinessDay. “More private sector participation and part regulation are needed to boost production.”
Pratt, who also serves as Tradegrid’s country manager, said capital will always chase returns, pointing out how Angola and Uganda record investments in their petroleum sector.
“The oil windfall is an illusion unless Nigeria ramps up local production, increases refining capacity, and builds buffers against external shocks,” SB Morgen warned.
