Nigerian crude slumps below $65 as OPEC boosts output despite market weakness
BY MOTOLANI OSENI
Nigerian crude oil prices have slipped below $65 per barrel—well under the Federal Government’s budget benchmark—amid growing concerns over global oversupply and weakening demand, as the Organisation of the Petroleum Exporting Countries and its allies (OPEC+) forge ahead with increased output.
Cargoes scheduled to load from Nigeria on May 10 remain unsold, underscoring sluggish buyer interest and growing scepticism about the outlook for West African crude. The market’s backwardated structure and surging freight costs have flattened differentials, making Nigerian grades less attractive to refiners.
Despite persistent geopolitical tensions and weak demand indicators, OPEC+ announced a second consecutive monthly hike in production, with an additional 411,000 barrels per day to be released in June. This move comes amid a broader strategy to gradually unwind cuts, even as Brent crude again fell below $62 per barrel, erasing recent gains.
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The decision followed a brief online meeting, during which OPEC+ maintained that “market fundamentals remain healthy and inventories are low,” despite mounting evidence of oversupply and eroding bullish sentiment. With the June hike, cumulative increases across April to June will total 960,000 barrels per day—representing 44 per cent of the 2.2 million bpd cuts introduced earlier.
Saudi Arabia’s push for deeper compliance has been linked to efforts to bring laggards like Iraq and Kazakhstan into line. Kazakhstan, however, has pushed back, stating it will prioritise domestic economic needs over OPEC+ quotas, even after exceeding its April production limit despite a 3 per cent decline in output.
The production surge has further pressured oil prices, which touched a four-year low of under $60 in early April. Market uncertainty is being compounded by the possibility of a U.S.-Iran diplomatic breakthrough or progress in Russia-Ukraine peace efforts—both of which could significantly shift supply dynamics.
Meanwhile, Washington’s pressure on OPEC+ to boost output is intensifying, with President Donald Trump expected to visit Saudi Arabia by month-end. His administration’s threat of secondary sanctions on Iranian oil buyers has also stirred market anxiety, raising fears of fresh supply disruptions.
Talks between the U.S. and China over tariff disputes are also being closely watched. While Beijing has expressed willingness to consider Washington’s proposals, optimism remains cautious, with markets bracing for further policy shocks ahead of a full OPEC+ ministerial meeting on May 28.
