Nigeria’s crude oil production declined for the second consecutive month in March, coinciding with a sharp drop in global oil prices, raising renewed concerns over the country’s 2025 budget sustainability and production targets.
According to fresh data from the Nigerian Upstream Petroleum Regulatory Commission (NUPRC), average daily crude production stood at 1.40 million barrels per day (mbpd) in March, down from 1.465 mbpd in February, and well below the 1.5 mbpd quota allocated by the Organisation of the Petroleum Exporting Countries (OPEC).
While Nigeria began the year on a promising note, briefly exceeding its OPEC quota with a January output slightly above 1.5 mbpd, the momentum has not been sustained. The drop in March marks a reversal that further dims the country’s ambitious target of reaching 2 mbpd by year-end.
In total production terms, including condensate output, fell from 1.78 mbpd in January to 1.67 mbpd in February, and now 1.603 mbpd in March, showing a consistent downward trend. The NUPRC report revealed that daily production fluctuated in March between 1.49 mbpd and 1.76 mbpd, with an average crude contribution of 1.4 mbpd and condensates accounting for 203,000 barrels per day.
“The average crude oil production was 93 per cent of the OPEC quota,” the commission stated.
Oil Prices Drop Below Budget Benchmark
Simultaneously, international oil prices have dropped below the benchmark of $75 per barrel set in Nigeria’s 2025 budget. As of Sunday, Brent crude traded at $64.76, while West Texas Intermediate (WTI) dropped to $61.50 per barrel both over $10 below the budgetary assumption.
This decline in oil prices and volume threatens government revenues, which are still heavily reliant on crude oil exports despite ongoing diversification efforts.
Demand Weakens for Nigerian Crude
Compounding the challenge is a weak demand outlook for Nigerian crude in global markets. A recent Argus Media report noted that as many as 15 April-loading Nigerian cargoes were yet to find buyers due to competition from cheaper alternatives like U.S. WTI, Caspian CPC Blend, and other Mediterranean crude grades.
European refiners, the traditional buyers of Nigerian crude, are reportedly turning to these lower-cost options amid sluggish demand, particularly in Asia.
Security and Infrastructure Still Major Hurdles
Despite the government’s optimism, crude oil theft and pipeline vandalism remain significant barriers to sustained output. The Minister of State for Petroleum Resources (Oil), Heineken Lokpobiri, had projected that Nigeria could ramp up production to 3 mbpd in 2025, comprising crude and condensates, by adopting an aggressive drilling strategy modeled after the U.S. “Drill, baby drill” approach.
While the government claims that such expansion would not conflict with OPEC quotas, analysts remain skeptical, citing the persistent operational and market challenges.
Outlook: Risks to Budget Execution
Experts warn that if production remains below the OPEC quota and prices continue to underperform, Nigeria could face serious revenue shortfalls. With the 2025 budget anchored on optimistic oil assumptions, any prolonged slump could undermine government spending, FX liquidity, and overall economic stability.
Unless urgent steps are taken to address security, logistics, and investment bottlenecks in the upstream sector, the path toward production recovery and fiscal resilience may remain elusive.
