Declining Oil Production Threatens Nigeria’s Fiscal Stability and Dollar Earnings
Nigeria’s fiscal stability is under increasing pressure as the country’s crude oil production dropped to its lowest level in 2025. According to the Nigerian Upstream Petroleum Regulatory Commission (NUPRC), production fell by 68,177 barrels per day in March, bringing the national output down to 1.60 million barrels per day (bpd), a sharp decrease from 1.67 million bpd in February. This decline marks the lowest oil output recorded this year, further exacerbating Nigeria’s already fragile economic situation.
The reduction in production comes at a critical time when oil revenues play a central role in funding Nigeria’s national budget. The country had based its 2025 budget on a crude oil price of $75 per barrel and a target of 2.06 million bpd, both of which now appear unattainable. As Nigeria’s output falls below OPEC quotas, there are growing concerns about the government’s ability to meet revenue targets, fund essential developmental projects, and sustain foreign exchange reserves.
Experts warn that the drop in oil production, coupled with the global oil price slump, could push Nigeria into deeper financial distress. Jide Pratt, COO of Aiona, highlighted that this scenario could result in increased borrowing, further elevating the nation’s debt levels. The weakening oil prices, fueled by OPEC+ decisions and external factors like US tariffs, are also reducing Nigeria’s foreign exchange earnings, which largely depend on oil exports, accounting for 90% of the country’s dollar earnings.
With these challenges, Nigeria may be forced to revise its budget assumptions, seek supplementary budgets, or even take on additional loans. Analysts stress the urgency of economic diversification, particularly in sectors such as agriculture, trade, and fintech, to mitigate the risk of further fiscal instability. The country must also prioritize structural reforms and consider asset sales to the private sector to stimulate economic growth and counter the effects of declining oil revenues.
Source: Business day