Nigeria’s oil production records first decline in six months

After a steady improvement in the country’s oil production output, Nigeria’s oil production dropped by two percent in March, with an output of 1.517 million barrels of oil per day.

The February average production output had represented a monthly increase of 3.5 per cent.

The fall represents the first production decline in the country’s oil sector in the last six months. However, even with the recent production increases, the country remained short of its OPEC production target, which stands at 1.8 million bpd.

The Nigerian Upstream Petroleum Regulatory Commission (NUPRC) did not give reasons for the drop, but this may not be unrelated to reports of a pipeline explosion in early March.

Although the country has not been able to meet its oil production allocation by OPEC+, experts said it is not a source of worry given that the OPEC+ is encouraging a cut in its production to shore up market price. In this instance, Saudi Arabia alone is pledging 500, 000 million barrels daily in output reduction.

Stakeholders, however, warned that there was an urgent need for the country to improve on its production output if it does not want to miss the output level needed for the 2023 budget, which stands at 1.69 million bpd for the year.

But hopes are alive to attain this target given that there is a mark up in the efforts to boost the country’s long-term production prospects. For instance, the NNPCL has began exploration in onshore frontier basins, aimed at expanding the country’s proven oil reserves from 37 billion barrels to 50.

In a related development, oil prices crashed early yesterday in a relatively calm and steady thin trade due to the Easter holiday. West Texan Intermediate (WTI) Crude was down by 0.29 percent at $80.43, while Brent Crude was down by 0.39 percent at $84.74.

This was after the product recorded a seven percent gain last week. The jump in prices last week followed the surprise announcement of several major OPEC+ producers that they would voluntarily cut total crude oil production by 1.66 million barrels per day (bpd) by the end of the year. The reduction in output includes Russia extending its current 500,000-bpd cut through December.


The cuts lifted oil prices by around $5 per barrel, bringing Brent to the $85 handle and WTI to above $80 per barrel again.

Interestingly, in the Asian trade yesterday crude oil prices started the week steady.

Currently, according to Bloomberg, traders were busy assessing the impact of the announcement on global oil supply. These may become a bit clearer later this week when OPEC and the International Energy Agency (IEA) release their new monthly oil market reports.

Experts while eagerly awaits the March CPI report from the United States tomorrow, contend that if it shows higher inflation still, it could lower prices despite the growing supply concerns. However, a poll by Reuters has suggested this won’t be the case and inflation cooled off to 5.2 percent in March from the six percent recorded in February.

The Head of Commodity Strategy at Saxo Bank, Ole Hansen, while commenting on the latest commitment of traders, said: “Money managers responded to the cuts from OPEC+ by raising their net long position – the difference between bullish and bearish bets – on WTI Crude by 63,000 lots to 174,600 lots. Most of the long position was driven by a collapse in the gross short position to a ten-week low of 35,000 lots.”