Sopuruchi Onwuka

Nigeria’s oil production edged lower in February, slipping to an average of 1.46 million barrels per day from 1.49 million in January, a decline of about 30,000 barrels per day. The drop comes at a time when global oil prices are rising, creating a mixed outlook for Africa’s largest crude producer.

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Brent crude averaged $69.41 per barrel during the month, up 7.5 percent from January, and climbed further toward the end of February, reaching $72.55 per barrel on the 27th amid heightened geopolitical tensions involving the United States, Venezuela and Iran.

The combination of lower output and higher prices highlights a familiar challenge for Nigeria. While stronger prices increase revenue per barrel, the country’s inability to meet its OPEC+ production quota of 1.5 million barrels per day limits the overall gains.

The shortfall underscores persistent structural issues, including security concerns in the Niger Delta, oil theft, and regulatory uncertainties that continue to weigh on investment and operational efficiency.

In response, the government is stepping up efforts to attract foreign capital, particularly from Gulf states, to develop untapped reserves and reduce vulnerability to external shocks. The strategy reflects a broader attempt to stabilize output over the medium term, although meaningful improvements are likely to take time given the scale of existing constraints.

Analysts expect production to remain below both last year’s levels and Nigeria’s OPEC+ target in the near term, with a gradual recovery projected toward 2028 if conditions improve.

Despite the softness in oil production, Nigeria’s wider economy has shown resilience. Gross domestic product grew by 4.1 percent year-on-year in the fourth quarter of 2025, slightly higher than the 4.0 percent recorded in the previous quarter and above the country’s five-year average.

For the full year, the economy expanded by 4.1 percent, accelerating from 3.8 percent in 2024. Growth has become increasingly broad-based, with the non-oil sector continuing to play a central role. Services, telecommunications, finance and technology-related activities have remained key drivers, while agriculture has benefited from improved security in food-producing regions and better access to inputs.

Industrial output has also strengthened, supported by improved foreign exchange liquidity, ongoing energy sector reforms and a modest recovery in investor confidence.

The oil sector itself contributed positively to growth in late 2025, expanding by 6.8 percent year-on-year in the fourth quarter, up from 5.8 percent in the preceding quarter.

However, this expansion reflects earlier improvements and does not fully offset the more recent decline in production levels seen at the start of 2026.

Government officials attribute the broader economic momentum to tighter fiscal coordination, cautious spending, stronger revenue mobilization and continued structural reforms aimed at restoring credibility and attracting investment.

Looking ahead, economic growth is expected to remain broadly stable around current levels through 2026, roughly in line with the sub-Saharan African average. Domestic demand should benefit from easing inflation and interest rates, which are likely to support both consumer spending and business activity.

At the same time, the external sector presents a more nuanced picture. Crude oil export volumes may soften due to production constraints, but this could be partly offset by expanding refined product exports as the Dangote Refinery ramps up capacity and continues to produce surplus fuel for international markets.

Global developments will remain a critical factor shaping Nigeria’s outlook. Ongoing tensions in the Middle East, particularly involving Iran, have the potential to keep oil prices elevated, which would boost export earnings and government revenues.

Analysts note that Nigeria stands to benefit from such price dynamics as a net crude exporter. At the same time, increased domestic refining capacity is helping to reduce the country’s exposure to swings in global fuel prices, offering some insulation to the domestic economy even though local prices still track international benchmarks.

Overall, Nigeria’s near-term trajectory reflects a balance between external tailwinds from higher oil prices and internal constraints on production. While the economy is becoming more diversified and less dependent on crude output alone, resolving long-standing challenges in the oil sector remains essential for unlocking stronger and more sustained growth.