The Organization of the Petroleum Exporting Countries (OPEC) just released a study stating that Nigeria produced an additional 50,000 barrels of crude oil on average per day in May. This increase helped to greatly enhance OPEC’s overall production for the month.
In addition to Nigeria, Iraq also increased its production output by 50,000 barrels per day, while oil powerhouse Saudi Arabia registered a marginal increase. Conversely, Algeria produced below its designated quota for the month.
Despite Iraq’s earlier pledge to reduce production, the country, which is the second-largest producer in OPEC, still increased its output. This rise occurred despite commitments from both Iraq and OPEC+ member Kazakhstan to counterbalance previous overproduction by implementing further cutbacks throughout 2024.
OPEC’s total output for May rose to 26.63 million barrels per day (bpd), marking an increase of 145,000 bpd compared to April. This figure surpasses OPEC’s implied target by approximately 250,000 bpd for the nine members bound by supply cut agreements, with Iraq accounting for the majority of this surplus production.
Countries exempt from output reductions, such as Iran and Venezuela, also experienced slight increases in output. Notably, Iran’s production levels are approaching a five-year peak achieved in November, despite ongoing U.S. sanctions. Iran has seen one of OPEC’s most significant output expansions in 2023.
In January, various members of OPEC+, a coalition comprising OPEC, Russia, and other allies, implemented fresh cuts in response to economic fragility and heightened supply from non-member sources. At the most recent meeting of the Joint Ministerial Monitoring Committee (JMMC) on Sunday, producers opted to maintain these cuts for the third quarter, following an earlier extension until June, and set production quotas for 2025 among other resolutions.
Nigeria’s designated production quota has remained steady since November of the previous year when the cartel convened to establish production levels for 2024. During this period, Nigeria’s proposed production quota rose from 1.38 million barrels per day to its current level of 1.5 million barrels per day. However, this quota still falls short of the daily production target of 1.78 million barrels outlined in the 2024 budget, raising concerns about budget execution.
President Bola Tinubu has set an ambitious target to increase Nigeria’s oil production to 4 million barrels per day to achieve the goal of a $1 trillion economy. Although crude oil production in Nigeria has increased marginally over the past year, it has not reached the highs of approximately 2 million barrels per day produced around 2019.
Several factors continue to limit Nigeria’s oil production capacity, including insecurity and oil theft in the Niger Delta, low investment in oil exploration, and aging oil fields. Addressing these challenges is critical for Nigeria to meet its production targets and support its economic growth ambitions.
