By Joy Baba-Yesufu
The price of Nigerian crude oil is edging closer to the Federal Government’s benchmark, spurred by a wave of drone attacks on oilfields in Iraq that have rattled global supply chains.
Nigeria’s flagship crude grades—Bonny Light, Brass River, and Qua Iboe—sold for $72.50 per barrel this week, just $2.50 shy of the government’s benchmark price of $75. The upward momentum follows the fourth round of drone strikes targeting oil installations in Iraq’s Kurdistan region, significantly impacting output.
According to industry reports, production in the region has dropped by 140,000 to 150,000 barrels per day, more than half its usual daily output of 280,000 bpd. The Tawke and Peshkabir fields operated by DNO ASA, along with the Sarsang field managed by HKN Energy, were among those hit. The latter was set ablaze, forcing a shutdown in regional output. While no group has claimed responsibility, Iran-aligned militias are widely suspected.
The global oil market has remained resilient amid the turmoil, buoyed by seasonal demand. Average consumption in early July rose to 105.2 million barrels per day, up by 600,000 bpd year-on-year, aligning with forecasts.
Domestically, Nigeria is seeking a 25 percent increase in its OPEC+ production quota—from 1.5 million to 2 million bpd. Nigerian National Petroleum Company Limited (NNPCL) CEO, Bashir Ojulari, confirmed the country’s push to meet domestic refining needs and capitalise on global market opportunities ahead of OPEC+ quota negotiations for 2027.
Despite its quota, Nigeria’s crude output has occasionally surpassed 1.5 million bpd, aided by inconsistent enforcement and ongoing efforts to combat oil theft and pipeline vandalism. June production averaged 1,505,474 bpd, according to the Nigerian Upstream Petroleum Regulatory Commission (NUPRC), representing 100.4 percent of the OPEC target. When condensates are included, total output rose to 1.7 million bpd—up from 1.65 million bpd in May.
The recent ramp-up is also linked to increased demand in West Africa, driven by the full-scale operations of the 650,000 bpd Dangote Refinery, which began output in late 2022. Ojulari said the refinery has created new demand hubs and underscored the importance of uninterrupted crude supply to meet local consumption needs.
Meanwhile, international oil majors are doubling down on Nigeria. ExxonMobil is investing $1.5 billion in offshore deepwater exploration, while Shell and TotalEnergies are preparing to boost production from Nigeria-led projects over the next two years.
