Nigeria’s average crude oil production dropped to 1.25 million barrels per day (bpd) in May, down from 1.28 million bpd recorded in April 2024, according to the latest OPEC Monthly Oil Market Report (MOMR). This decline of 30,000 bpd marks the second-lowest production level for the country in 2024, surpassed only by March’s production of 1.23 million bpd.
Despite the decrease, Nigeria remains Africa’s largest crude oil producer, followed by Angola and Libya. The OPEC report, which includes data from secondary sources, also noted that total crude oil supply by OPEC+ members reached 40.9 million bpd in May.
Interestingly, the report highlighted a discrepancy, stating that Nigeria’s crude oil production had actually increased by 74,000 bpd, rising from 1.34 million bpd to 1.41 million bpd. This aligns with a Reuters survey suggesting an increase of around 50,000 bpd for the month.
**Global Oil Demand and Prices in May**
Global demand for crude oil remained steady in May, maintaining the previous month’s growth rate of 2.2 million bpd. The projected daily demand for crude oil worldwide is expected to reach 104.5 million bpd in 2024.
However, crude oil prices saw a decline. The OPEC Reference Basket (ORB) average price fell by $5.53, or 6.2%, month-on-month, averaging $83.59 per barrel. Oil futures prices also decreased, with the ICE Brent front-month contract dropping by $6.00, or 6.7%, to an average of $83.00 per barrel.
Impact on Nigeria
The reduction in Nigeria’s crude oil production underscores ongoing challenges in the country’s oil sector, which struggles to meet its OPEC production quota and 2024 budget benchmark. The consistent failure to achieve these targets has significant financial implications, reducing the country’s projected revenue from oil sales.
Despite the drop in production, Nigeria benefits from crude oil prices that remain above the 2024 budget benchmark of $78 per barrel. However, lower production levels translate to reduced earnings, impacting the country’s efforts to enhance its revenue base.
Additionally, Nigeria’s persistent production shortfalls have led to a reduction in its OPEC quota. In 2023, the country failed to meet its quota of 1.7 million bpd, resulting in a lowered quota of 1.5 million bpd for 2024. Recently, OPEC+ set Nigeria’s crude oil production quota at 1.5 million bpd for 2025, despite the country’s target of 2 million bpd.
This situation highlights the volatility and challenges within Nigeria’s oil sector as the country strives to stabilize and increase its crude oil production to meet both domestic and international demands.
