Nigeria’s crude oil production saw a notable increase of 3.4% in August, reaching an average of 1.352 million barrels per day (mbpd), according to the latest data from the Organization of Petroleum Exporting Countries (OPEC).
This marks a rise of 45,000 barrels compared to the 1.307 million bpd recorded in July, as reported through direct communication with Nigerian authorities.
While this growth signals a recovery in Nigeria’s oil sector, the country still falls short of OPEC’s production target of 1.5 million bpd. However, the increase has solidified Nigeria’s position as Africa’s largest oil producer, especially as Libya, its closest rival, faced significant production disruptions during the month.
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Crude Production Figures
OPEC’s August report contrasts figures provided by Nigerian authorities. According to them, Nigeria’s production was slightly higher at 1.448 million bpd, reflecting an increase of 57,000 barrels from July’s average of 1.391 million bpd.
However, crude oil production from DoC countries, including Nigeria, experienced a decline in August, dropping by 304,000 bpd compared to the previous month. This reduction brought the average production from these countries to around 40.66 million bpd, according to secondary sources.
Despite ongoing challenges in meeting its OPEC quota, Nigeria’s crude output remains a critical component of the global oil supply chain. The rise in August follows months of fluctuating production due to factors such as oil theft, pipeline vandalism, and aging infrastructure, all of which have hindered Nigeria’s ability to fully meet its production targets.
Africa’s Largest Oil Producer
The August production increase allowed Nigeria to maintain its top position among African oil producers. Libya, which has occasionally challenged Nigeria for this title, experienced a temporary shutdown of its major oil fields during the same period, which curtailed its production capacity.
Nigeria’s recovery in crude oil output can be attributed to ongoing efforts by the government and the Nigerian National Petroleum Corporation (NNPC) to mitigate oil theft and improve operational efficiencies. However, significant work remains to achieve the 1.5 million bpd target set by OPEC, a critical benchmark for Nigeria’s economic recovery, given the country’s dependence on oil revenues.
Global Oil Demand and Price Trends
OPEC’s August report also revised its forecast for global oil demand growth. The cartel adjusted its 2024 growth projection to 2.03 million bpd, a slight decrease from the earlier estimate of 2.11 million bpd. Similarly, the 2025 forecast was reduced to 1.74 million bpd from 1.78 million bpd, underlining changing dynamics in global energy consumption.
August saw a decline in global oil prices. OPEC’s Reference Basket (ORB) dropped by $6.02, or 7.1%, to an average of $78.41 per barrel. The ICE Brent front-month contract also fell by $5.00, or 6.0%, to $78.88 per barrel, while the NYMEX WTI front-month contract decreased by $5.05, or 6.3%, to $75.43 per barrel. These price drops highlight ongoing market volatility as demand faces headwinds from macroeconomic uncertainties.
Outlook for Crude Supply and Non-OPEC Growth
OPEC also provided projections for crude oil supply in 2024 and 2025, focusing on non-OPEC+ countries. Oil supply from these countries is expected to grow by 1.2 million bpd in 2024, driven primarily by increased production from the U.S., Canada, and Brazil. This growth forecast remains consistent with OPEC’s previous assessment.
For 2025, the non-OPEC+ liquids supply is projected to grow by 1.1 million bpd, with the U.S., Brazil, Canada, and Norway leading the expansion. In contrast, natural gas liquids (NGLs) and non-conventional liquids from countries participating in the Declaration of Cooperation (DoC) are expected to grow modestly by 0.1 million bpd in 2024, with further growth of around 60,000 barrels per day anticipated in 2025.
Oil Production Challenges Remain
While Nigeria’s August production growth is a positive sign, the country continues to grapple with challenges that limit its ability to fully capitalize on its oil resources. The shortfall in meeting OPEC’s production quota remains a concern, especially as oil remains a cornerstone of Nigeria’s economy. The country’s fiscal health is heavily reliant on oil exports, and the decline in oil production has significantly impacted its revenue generation.
Ongoing issues, including oil theft, insecurity in the Niger Delta, and infrastructural deficits, pose risks to sustaining production increases. Additionally, global market volatility, driven by fluctuating demand and the potential for geopolitical disruptions, adds uncertainty to the oil sector’s outlook.
The Nigerian government has been working on reforms aimed at addressing these challenges. These include efforts to secure oil infrastructure, increase transparency in the sector, and attract investment in both upstream and downstream oil activities. However, energy experts believe the efforts are not yielding the needed result.