Nigerian crude oil prices have surged, with the Bonny Light crude grade reaching approximately $70 per barrel on Monday. This increase follows a record peak earlier in the month, driven by a combination of factors including improved security conditions in the Niger Delta and a slow recovery in upstream investment. The rise in prices is also attributed to the transfer of assets from foreign oil companies to local operators, which has boosted production.
The country’s crude oil production averaged 1.5 million barrels per day in July, exceeding its quota set by the Organization of Petroleum Exporting Countries (OPEC) and its partners (OPEC+). This is the second consecutive month that Nigeria has surpassed its production quota. According to OPEC’s August Monthly Oil Market Report, Nigerian crude oil production has been on the rise, supported by increased investment and improved security.
The increase in crude oil prices has been further driven by concerns over potential disruptions to Russian oil supply, following intensified attacks by Ukraine on Russian energy sites. Additionally, expectations of a cut in US interest rates have supported the outlook for global growth and fuel demand, contributing to the rise in crude oil prices. Brent oil futures have increased to $68 per barrel, while West Texas Intermediate (WTI) oil futures have risen by 15 cents, or 0.24 percent, to $63.81.
Indian refiners have purchased two million barrels of Nigerian crude for delivery in September and October, highlighting the growing demand for Nigerian crude. India is now the largest consumer of cheap Russian oil, accounting for 40 percent of its total imports. The low sulfur content of Nigerian crude grades makes them ideal for India’s refineries, potentially signaling the beginning of a long-term partnership between the two countries.
However, India will face competition from the Dangote Refinery, which is set to purchase all its crude from the Nigerian market by the end of the year. The refinery, which began operations in 2024 after several delays, has a capacity of 650,000 barrels per day and currently produces naphtha, diesel, gasoline, and aviation fuel. The $20 billion refinery marks a significant shift in Nigeria’s oil industry, with the potential to impact global oil markets. As Nigeria continues to increase its crude oil production and meet growing demand from countries like India, the significance of its role in the global oil market is likely to be reinforced.
