Nigeria has reduced crude oil production by approximately 50,000 barrels per day (bpd) in March, delivering a significant blow to its projected 2.06 million bpd target for the 2025 budget.
According to a Bloomberg survey, Nigeria recorded the highest production cut among Organization of Petroleum Exporting Countries (OPEC) members, bringing its average output down to 1.5 million bpd. This decline aligns with the country’s OPEC-mandated quota and follows disruptions in Bonny Light crude loadings due to a fire at the Trans-Niger Pipeline.
OPEC Production Decline and Nigeria’s Challenges
OPEC collectively reduced its crude oil production by 110,000 bpd in March, bringing total output to 27.43 million bpd. Despite calls from OPEC leaders for strict adherence to production quotas, some member nations continue to exceed their limits.
Notably, OPEC data does not account for condensate, which typically contributes around 250,000 bpd to Nigeria’s total output.
On March 17, militants attacked a section of the Trans-Niger Pipeline, one of Nigeria’s key crude oil transport networks, leading to an explosion. This pipeline, which transports over 450,000 barrels of crude per day to the Bonny Terminal in Rivers State, has been a frequent target of sabotage, resulting in significant revenue losses for the government.
In February, Nigeria self-reported a production decline of 74,000 bpd, raising concerns about the country’s ability to fund its nearly N55 trillion 2025 budget. OPEC’s Monthly Oil Market Report (MOMR) highlighted that Nigeria’s crude oil production dropped from 1.54 million bpd in January to 1.47 million bpd in February, a 4.81% decrease.
Global Oil Market Trends and OPEC+ Response
The OPEC+ alliance, led by Saudi Arabia and Russia, plans to gradually increase production after years of output restrictions aimed at stabilizing oil prices. This decision follows pressure from former U.S. President Donald Trump, who urged OPEC to cut oil prices. Additionally, OPEC leaders have expressed frustration over persistent overproduction by countries such as Kazakhstan.
Iraq followed Nigeria with the next-largest production cut, reducing output by 40,000 bpd to 4.15 million bpd. However, Baghdad remains above its agreed limit of 4 million bpd and has made minimal progress in compensating for previous overproduction. In contrast, the United Arab Emirates increased production by 30,000 bpd to 3.33 million bpd, further exceeding its quota.
OPEC+ is set to add approximately 138,000 bpd in April, marking the first phase of gradual production increases expected to continue through late 2026. The alliance is also set to decide on its May production levels in the coming days, with many delegates expecting further adjustments.
Oil Prices and Market Reaction
Oil prices remained steady on Monday as geopolitical tensions, including Trump’s threats of secondary tariffs on Russian oil and potential military action against Iran, fueled supply concerns. However, fears of a trade war and economic slowdowns in major markets, including China and India, weighed on demand forecasts.
Brent crude futures edged down 4 cents (0.05%) to $74.73 per barrel, after touching an intraday high above $75. U.S. West Texas Intermediate (WTI) crude futures dropped 6 cents (0.08%) to $71.42 per barrel. On Monday, both contracts had reached five-week highs, according to a Reuters report.
Trump warned that he would impose secondary tariffs of 25% to 50% on Russian oil buyers if Moscow obstructed efforts to end the war in Ukraine. Such tariffs would disrupt global oil supply and impact major importers, including China and India. Trump also threatened Iran with similar tariffs and potential military action if Tehran failed to negotiate with Washington over its nuclear program.
A Reuters poll of 49 economists and analysts projected that oil prices would remain under pressure throughout 2024 due to U.S. tariffs, economic slowdowns in key markets, and increased OPEC+ supply.
Conclusion
As Nigeria grapples with declining crude production and ongoing pipeline sabotage, its ability to meet budgetary expectations remains uncertain. Meanwhile, global oil markets continue to react to geopolitical developments, with OPEC+ set to make further adjustments to its production strategy in the coming months.