In May, Nigeria’s average crude oil production declined to 1.25 million barrels per day (bpd) from 1.28 million bpd in April 2024, marking a drop of 30,000 bpd. This level represents the second lowest in 2024, surpassed only by March’s 1.23 million bpd, as detailed in the OPEC Monthly Oil Market Report (MOMR) for May. The report also noted that the total crude oil supply by OPEC+ members stood at 40.9 million bpd according to secondary sources.
Despite this reduction, Nigeria maintained its position as Africa’s largest crude oil producer, ahead of Angola and Libya. Interestingly, secondary sources reported an increase of 74,000 bpd in Nigeria’s crude oil production, from 1.34 million bpd to 1.41 million bpd in May, which aligns with a Reuters survey that estimated a 50,000 bpd increase.
Global crude oil demand remained steady in May, with a growth of 2.2 million bpd compared to the previous month. The projected daily global crude oil demand for 2024 is expected to reach 104.5 million bpd. Meanwhile, the OPEC Reference Basket (ORB) showed a decrease in the average crude oil price by $5.53, or 6.2%, month-on-month, averaging $83.59 per barrel. Similarly, oil futures prices declined, with the ICE Brent front-month contract falling by $6.00, or 6.7%, to an average of $83.00 per barrel.
The decrease in Nigeria’s crude oil production highlights the erratic performance of its oil sector as it strives to boost daily output. This marks the fifth consecutive month that Nigeria has failed to meet its OPEC production quota or the 2024 budget benchmark, impacting projected revenues. However, higher crude oil prices, above the 2024 budget benchmark of $78 per barrel, offer some consolation.
Nevertheless, reduced oil production results in lower earnings from oil sales, hindering the country’s efforts to increase revenue. Another consequence is the continued reduction in Nigeria’s OPEC quota. In 2023, Nigeria’s significant shortfall from its OPEC quota of 1.7 million bpd led to a reduction to 1.5 million bpd for 2024. Recently, the OPEC+ Joint Ministerial Monitoring Committee (JMCC) set Nigeria’s production quota at 1.5 million bpd for 2025, despite the country’s target of 2 million bpd.
