Nigerian crude prices dipped to a three-week low on Tuesday, falling back to rates seen before the recent Israel-Iran fighting as fading supply fears and talk of an OPEC+ output increase weighed on the market.
Nigeria’s key grades-Bonny Light, Brass River, and Qua Iboe-finished below $70 a barrel at the last session, leaving them $5 under the Federal Government’s benchmark for crude.
Brent September futures traded at $66.57 a barrel, while West Texas Intermediate contracts moderated to $63.64 a barrel.
Those Brent figures mark the lowest level since June 11, just before fighting between Israel and Iran broke out, though a ceasefire now appears to be holding.
Market attention is fixed on the Organization of Petroleum Exporting Countries and its partners, with the group set to gather later this week and observers expecting it to unwind some of the cuts that have been in place for the past two years.
Nigerian Oil production dips marginally
Nigeria’s daily oil production fell from 1.68 million barrels per day in April to 1.65 million barrels per day in May, a minor setback for the Federal Government’s efforts to increase oil production to over two million barrels per day.
A former militant’s contract to guard installations in the oil-producing Niger Delta was renewed as part of the current administration’s efforts to address oil theft. The Nigerian Upstream Petroleum Regulatory Commission reported that crude production decreased from 1.48 million barrels daily in April to 1.45 million barrels per day in May.
- Nigeria’s ambitious 2.1 million barrel per day target was bolstered by the increase in crude production from 1.4 million barrels per day in March to 1.48 million barrels per day in April but the decline in May’s daily crude production seems to have undermined the gains made in the fourth month, raising doubts about the nation’s capacity to meet the 2 million barrels per day goal.
- Nigeria exported 82% of its crude oil in the first quarter of 2025, despite local refineries’ complaints of a shortage.
- A report released by the Nigerian Upstream Petroleum Regulatory Commission found that local refineries only received 18% of the crude. One of the biggest refinery complexes in the world, the Dangote Petroleum Refinery in Nigeria, has a nameplate capacity of 650,000 barrels per day. While some private companies run various modular refineries, the Federal Government owns the refineries in Port Harcourt, Warri, and Kaduna.
Dangote and other modular refineries in the nation, aside from the state-owned facilities, have frequently lamented the low supply of crude, which limits their ability to produce enough fuel for the nation.
Increased Oil Supply Caps Oil Bullish Outlook
Traders are also wary of a sweeping U.S. tax cut and spending package endorsed by Donald Trump, fearing that a bigger fiscal gap would heighten economic risks in the world’s largest oil importer.
- OPEC+ production hike in focus as July meeting looms. OPEC+ plans to lift output by 411,000 barrels per day in August, following similar increases agreed for May, June, and July.
- If approved, that rise would push the group’s total boost this year to 1.78 million barrels per day, yet it still falls short of the cuts OPEC+ made over the past two years.
Morgan Stanley said in a note on Monday that Brent crude is likely to slip toward $60 a barrel by early 2026, as supplies look solid and tensions between Israel and Iran ease.
The bank also projects non-OPEC nations will add roughly 1 million barrels per day in both 2025 and 2026-higher volumes that should cover demand growth during that period.
- Morgan Stanley expects a surplus of around 1.3 million barrels per day by 2026 because OPEC keeps unwinding its quota cuts,
- OPEC+, the Organization of the Petroleum Exporting Countries and its allies, including Russia, agreed to raise oil production by 411,000 barrels per day for July. This brings the total amount of increases announced or made since April to 1.37 million barrels per day.
Rising OPEC+ supply and a muted demand outlook continue to weigh on crude, despite analysts’ slightly higher oil price forecasts following the escalation of Middle East tensions.
