Onome Amuge
Nigeria recorded a marginal rise in crude production in November but continued to fall short of its OPEC-assigned quota for the fourth month in a row, underscoring persistent structural weaknesses in Africa’s largest oil producer at a time when global market conditions are growing more complex and policy-makers face acute pressure to stabilise foreign-exchange earnings.
According to the Organisation of Petroleum Exporting Countries’ latest Monthly Oil Market Report, Nigeria pumped 1.436 million barrels per day in November, compared with 1.401 million bpd in October. The increase is modest but notable amid a year defined by operational setbacks, sporadic disruptions to export terminals, pipeline vandalism, and underinvestment across the upstream sector. Yet the country remains below its production target, last met in July 2025, with November marking the fourth straight month of quota non-compliance.
OPEC data show that Nigeria averaged 1.444 million bpd in the third quarter of 2025, down from 1.481 million bpd in the previous quarter and below the levels recorded earlier in the year. The decline highlights the difficulty Nigeria faces in sustaining production momentum despite high-profile investments in deepwater assets, renewed intervention by security forces along key pipelines, and the government’s push to de-bottleneck project approvals through reforms at the Nigerian Upstream Petroleum Regulatory Commission.
The November output figures come at a delicate moment for global oil markets. The OPEC+ alliance is expected to require roughly 43 million bpd of combined production next year to keep supply and demand in balance, an estimate broadly consistent with volumes pumped last month. The projection runs counter to market chatter suggesting that a supply surplus could emerge in 2026 as non-OPEC output expands, particularly from the US Permian basin and new offshore projects in Brazil and Guyana.
Saudi Arabia and other influential producers have already acknowledged liquidity stresses and a fragile macro environment by agreeing last month to pause further output increases during the first quarter of 2026 after accelerating production earlier this year. The deliberations underscore a policy stance aimed at stabilising prices in the face of uneven global economic growth, China’s sluggish industrial rebound, and geopolitical uncertainties in the Middle East and Black Sea corridor.
For Nigeria, however, the core challenge is far more domestic. The inability to meet its assigned quota at a time when OPEC+ supply management remains tight limits the country’s capacity to rebuild foreign-exchange reserves, which have contracted steadily amid heightened dollar demand, weak capital inflows, and volatile portfolio movements. Crude exports still account for the majority of Nigeria’s external receipts and remain critical to funding government spending, servicing debt obligations, and stabilising the naira as the central bank navigates inflationary pressures.
Although November’s production rise is insufficient to narrow the fiscal gap significantly, analysts say the latest numbers offer faint signs of recovery. Some of the incremental output stems from improved uptime at key terminals such as Forcados and Bonny, while the reopening of certain pipeline routes previously impaired by theft and sabotage has allowed operators to evacuate crude more consistently.
International oil companies operating in Nigeria have maintained that production ramp-up will require sustained regulatory clarity, competitive fiscal incentives, and credible security guarantees capable of curbing the widespread tapping of pipeline infrastructure, a problem that has eroded several hundred thousand barrels per day of potential output over the last decade.
But beyond upstream constraints, the broader architecture of Nigeria’s oil economy is undergoing a transition shaped by refining policy, rising domestic demand pressures, and the shift toward private-sector dominance in downstream operations. With several state-owned refineries undergoing rehabilitation and the Dangote refinery beginning phased commissioning, Nigeria’s medium-term crude utilisation strategy is evolving. Policymakers argue that domestic refining capacity will change the dynamics of both import dependency and export patterns; yet there remain operational uncertainties around feedstock supply, distribution networks, and pricing frameworks.
Onshore operators also face a more adverse investment climate following years of vandalism, regulatory delays, environmental litigation, and the exit or downsizing of several multinational producers, which have divested assets citing security risks and a preference for more stable offshore investments. While private capital is gradually returning to the sector, industry executives say that Nigeria must address structural impediments, particularly logistics bottlenecks and local community tensions, to translate resource potential into sustained production gains.
Despite these headwinds, Nigeria’s policymakers are positioning 2026 as a potential inflection year. Officials point to rising upstream spending commitments from both indigenous and international operators, the rollout of new fiscal terms under the Petroleum Industry Act, and the expected ramp-up of modular refineries as catalysts for increased production stability. Whether these elements coalesce into a durable recovery remains uncertain.
The domestic fuel market, meanwhile, is showing signs of changing consumption dynamics. New data from the Nigerian Midstream and Downstream Petroleum Regulatory Authority show that national petrol consumption fell to 52.9 million litres per day in November, down from 56.74 million litres in October. The decline reflects evolving demand patterns in the wake of continued inflationary pressures, high transport costs, and shifting consumer behaviour following fuel subsidy reforms.
Demand compression, while modest, is considered relevant for Nigeria’s import bill and projected fiscal balance. The reduction in petrol consumption may ease pressure on dollar-denominated imports, though analysts note that supply constraints and retail price volatility continue to weigh on both household consumption and commercial logistics.
According to analysts, the interplay between domestic fuel demand, external crude production, and global price volatility will remain central to the government’s fiscal planning. The federal budget for 2026 assumes an oil production benchmark that exceeds current output levels, a gap that could widen if the structural issues haunting the upstream sector persist into next year.
