The Nigerian crude price rose toward the Federal Government benchmark as drones targeted oilfields in Iraq for the fourth time, sparking fears of supply disruptions and highlighting ongoing volatility in the Middle East.
Nigerian oil blends, including Bonny Light, Brass River, and Qua Iboe, traded at $72.5 per barrel, which was $2.5 lower than the Federal Government benchmark for crude.
Monthly output from the Kurdistan region has decreased by between 140,000 and 150,000 barrels per day, a decline greater than half the region’s average output of 280,000 barrels daily.
Drone strikes loaded with explosives attacked the Tawke and Peshkabir fields managed by DNO ASA, as well as Dohuk. One attack set fire to the Sarsang field operated by HKN Energy, causing a regional shutdown. While no group has claimed responsibility for the attacks, Iranian-sponsored militias are believed to have targeted this week’s oilfields in Iraqi Kurdistan.
The global crude oil market has been supported by seasonal demand. Oil consumption in the first half of July averaged 105.2 million barrels a day, an increase of 600,000 bpd over the previous year’s figure and largely in line with expectations.
Nigeria revamps oil production
Nigeria plans to increase its share of OPEC+ production by 25%, aligning with OPEC+ limits. Bashir Ojulari, NNPCL chief, commented on Africa’s leading crude oil producer, stating he favors raising the quota to two million barrels per day from the current 1.5 million bpd. Members of OPEC+, an alliance of major oil exporters, are discussing setting production limits for 2027.
- Nigeria has lately tackled widespread oil theft and pipeline vandalism, which have allowed it to exceed the 1.5 million barrels per day output cap. 90% of Nigeria’s foreign exchange earnings come from crude oil exports; however, these issues have prevented the country from increasing its production beyond 1.2 million barrels per day.
- NUPRC (Nigerian Upstream Petroleum Regulatory Commission) data showed Nigeria’s average daily crude oil production was surpassing the OPEC quota of 1.5 million barrels per day in June. This marked the second time in the same year that the country exceeded its quota.
Nigeria’s production capacity reached 1,505,474 barrels daily, as reported by NUPRC, which is indicated as “100.4 percent of the OPEC quota.” Total condensate and oil production reached about 1.7 million bpd, showing an increase from the May output of 1.65 million bpd.
The demand for oil and fuel in West Africa increased with the operation of Dangote, Africa’s largest refinery, which began full operations in late 2022 with a capacity of 650,000 barrels per day.
Ojulari highlights this as a key factor in constructing new economic fuel demand centers for Nigeria and stresses the need for unrestricted crude oil production to meet the country’s fuel needs.
Exxon Mobil plans to invest $1.5 billion to develop and explore deepwater oil and gas off Nigeria’s coast. Additionally, Shell and TotalEnergies aim to significantly boost oil and gas production from Nigerian-operated projects over the next two years.
Shell foresees production commencement at the Bonga North deepwater oil and gas field by 2027, along with plans by TotalEnergies for gas production from the Ubeta gas field by the same year.
Market concerns about summertime demand, along with recent drone attacks on Northern Iraqi oil fields, have increased summer demand and crude supply.
Brent Oil settles near $70 a barrel
Brent crude futures climbed to $69.81 per barrel, while West Texas Intermediate was priced at $68 a barrel. Oil traders see the current geopolitical environment as complex and uncertain, pushing more activity into the crude oil futures and options markets or causing some to use options.
Current trading volumes and open interest represent the total contracts held at record highs, highlighting how oil prices are becoming more volatile and sought after.
- The desire to avoid price swings by U.S crude holders is balanced by speculation from traders taking the chance to re-enter the market after a year-long pause.
- Brent crude averaged $70 per barrel, fluctuating between $60 and $85 a barrel in the first half of 2025. Recent reports show U.S. crude stockpiles have decreased, with exports expected to rise.
- Asia’s demand strengthened as refineries resumed operations after maintenance during the peak seasonal demand period. Oil fundamentals are likely to support prices in the short term, with the market expected to remain tight through this quarter before supply improves in the last three months of the year.
- However, uncertainty over US tariff policy, likely unresolved until after August 1, remains a market drag.
Additionally, major oil producers’ plans to eliminate output cuts will increase supply after the seasonal peak of Northern Hemisphere summer demand. For the week, both Brent and WTI dropped over 1%.
Oil production in the semi-autonomous Kurdistan region has been reduced from about 280,000 barrels per day to roughly 140,000–150,000 barrels per day, according to two energy officials.
