MARKET NEWS
Nigeria oil output drops to 1.4m in March, weakens 2025 budget
There is a growing apprehension over the 2025 budget implementation, as Nigeria’s crude oil production failed to improve in March, dropping further to 1.401 million barrels per day (bpd).
This is according to the latest data from the Organisation of the Petroleum Exporting Countries (OPEC).
The ICIR reports that the development has altered the 2025 budget implementation pattern, which relied on $75/bpd and a 1.5 million OPEC production quota for its implementation.
In its Monthly Oil Market Report released on Monday, April 14, OPEC indicates that Nigeria’s crude oil output dropped by 64,000 bpd in March from 1.465 million bpd in February.
This is the second consecutive month Nigeria’s crude oil production has fallen after it slightly surpassed the OPEC quota of 1.5 million bpd in January.
In January, Nigeria’s average daily crude oil output reached 1.539 million bpd for the first time since OPEC set a daily target of 1.5 million for the country at its ministerial meeting on November 30, 2023.
The latest OPEC report on Nigeria’s average crude oil production has again worsened the concerns surrounding the continued decline in oil prices in the international market and the United States’ high-handedness in imposing tariffs on various countries, including Nigeria.
“The latest US tariffs, particularly on Nigerian oil and gas exports, are expected to have a limited impact on Nigeria’s economy, considering the exemptions for oil and gas and the country’s limited exposure to US trading,” OPEC stated.
The oil cartel noted that though Nigeria’s inflation continues to decline, a weaker naira could slow the drop in price pressures.
It also drew concern about Nigeria’s public debt, which rose in the fourth quarter of 2024 to N144.67 trillion, according to the latest disclosure by the Debt Management Office (DMO).
According to OPEC, rising oil production will help Nigeria’s fiscal position, even if lower oil prices may be a concern.
The prices of crude have been on a downward slope in recent times, dropping far below Nigeria’s budgetary benchmark.
The ICIR has reported how this poses a major concern in the implementation of the country’s 2025 budget size of N54.99 trillion, which would be largely dependent on proceeds from crude oil.
OPEC cuts 2025 oil demand forecast over U.S. tariffs
OPEC, in its April report, says it now sees demand to grow by 1.3 million bpd in 2025, down from a previous forecast of 1.4 million bpd.
The price of its basket of twelve crudes fell to $66,25 a barrel on Monday, compared with $70,85 the previous Friday, according to OPEC Secretariat calculations.
The development comes after the eight OPEC+ countries, which previously announced additional voluntary adjustments in April and November 2023, namely Saudi Arabia, Russia, Iraq, UAE, Kuwait, Kazakhstan, Algeria, and Oman, met virtually on April 3, 2025, to review global market conditions and outlook.
Given the continuing healthy market fundamentals and the positive market outlook, and by the decision agreed upon on December 5, 2024, subsequently reaffirmed on March 3, 2025, to start a gradual and flexible return of the 2.2 million barrels per day voluntary adjustments starting from April 1, 2025.
The eight participating countries will implement a production adjustment of 411 thousand barrels per day, equivalent to three monthly increments, in May 2025.
This comprises the increment originally planned for May in addition to two monthly increments.
The gradual increases may be paused or reversed, subject to evolving market conditions, OPEC+ had said, adding that the flexibility would allow the group to continue to support oil market stability.
This measure will provide an opportunity for the participating countries to accelerate their compensation, even as the eight countries have set May 5 to meet to decide on June production levels.
