Crude oil prices for Nigeria’s main export grades—Bonny Light, Brass River, and Qua Iboe—have fallen below $70 a barrel, returning to levels last seen before the Israel-Iran conflict flared up in early June. This marks a significant drop, putting the current price $5 beneath the Nigerian government’s budget benchmark. Brent crude futures traded at $66.57 while West Texas Intermediate slipped to $63.64, driven by receding supply fears and anticipation of increased output by the OPEC+ group.
Nigeria’s oil production also took a minor hit, dipping from 1.68 million barrels per day in April to 1.65 million in May. Despite prior momentum toward a 2.1 million barrels per day target, this downturn casts doubt on the country’s ability to meet its production goals. Compounding the issue, crude allocation to local refineries remains low—just 18% in Q1 2025—leaving industrial giants like the Dangote Refinery and smaller modular plants underutilized.
Attention now turns to OPEC+ as it prepares to meet later this week. Analysts expect the coalition to continue easing the output cuts that have propped up prices over the last two years. An anticipated hike of 411,000 barrels per day for August could bring this year’s total increase to 1.78 million barrels daily, though this still falls short of prior cuts. The potential rise in supply is adding pressure to already sliding oil prices.
Global market sentiment is further dampened by U.S. fiscal concerns. Traders are wary of a proposed tax cut and spending package backed by Donald Trump, which could expand America’s deficit and slow down economic growth in the world’s largest oil importer. Morgan Stanley has forecast that Brent crude could fall as low as $60 a barrel by early 2026, due to ample supply and easing geopolitical risks in the Middle East.
As Nigeria’s crude revenue and currency remain tightly linked to oil exports, the current price dip threatens national earnings and the stability of the naira. If global production continues to rise without matching demand, Nigeria may face deeper fiscal challenges ahead, especially if its domestic refining capacity remains underutilized. All eyes now remain on OPEC+ and whether it will proceed with planned output hikes amid these fragile market dynamics.
Source: Nairametrics