Oil Dips Below $70 as Supply Concerns Ease

Nigerian crude oil prices fell to a three-week low on Tuesday, retreating to levels last seen before the Israel-Iran conflict erupted, as fading supply disruption concerns and speculation of a potential OPEC+ production hike weighed on global markets.

The country’s flagship crude grades—Bonny Light, Brass River, and Qua Iboe—closed trading below $70 per barrel, falling at least $5 short of the Federal Government’s benchmark price. Brent September futures settled at $66.57 per barrel, while West Texas Intermediate traded at $63.64 per barrel, marking the lowest levels for Brent since June 11.

Market attention is now focused on the upcoming meeting of the Organization of the Petroleum Exporting Countries and its allies (OPEC+), where discussions are expected to center around unwinding output cuts that have been in place for nearly two years.

Nigeria’s crude oil production slipped marginally in May, declining from 1.68 million barrels per day in April to 1.65 million barrels per day, according to data from the Nigerian Upstream Petroleum Regulatory Commission (NUPRC). The figures include both crude and condensate outputs.

Efforts to combat oil theft have continued, with the renewal of a surveillance contract for a former militant to help secure pipelines and installations in the Niger Delta region. Despite such interventions, crude output alone dipped from 1.48 million barrels per day in April to 1.45 million barrels per day in May.

The setback comes after signs of recovery in March and April had given hope that Nigeria could reach its ambitious production target of 2.1 million barrels per day. The reversal in May has renewed doubts about the country’s capacity to meet that goal.

Despite exporting 82% of its crude in the first quarter of 2025, local Nigerian refineries continue to face inadequate supply. According to the NUPRC, only 18% of crude produced during the period was allocated to local refining facilities.

This under-supply persists despite the presence of the Dangote Petroleum Refinery, a massive 650,000-barrel-per-day facility, along with multiple modular refineries and government-owned plants in Port Harcourt, Warri, and Kaduna. Operators of these refineries, including Dangote, have consistently lamented the scarcity of feedstock needed to sustain production.

Meanwhile, market sentiment remains under pressure as global traders eye a proposed U.S. tax cut and spending plan endorsed by former President Donald Trump. Analysts warn the move could expand fiscal deficits and spark broader economic risks in the world’s top oil-importing nation.

OPEC+ has already agreed to raise output by 411,000 barrels per day in July. If a similar boost is approved for August, the total increase this year would reach 1.78 million barrels per day. Still, this would only partially offset the cumulative cuts made by the group since 2022.

Analysts at Morgan Stanley forecast Brent crude could slide further, potentially hitting $60 per barrel by early 2026, due to easing geopolitical tensions and rising supply from both OPEC+ and non-OPEC producers. The bank estimates that non-OPEC countries will add approximately 1 million barrels per day in 2025 and another 1 million in 2026, which could lead to a surplus of around 1.3 million barrels per day within the next 18 months.

The resurgence of OPEC+ supply, combined with sluggish demand growth and increasing competition from alternative energy sources, continues to cloud the near-term outlook for oil-producing nations like Nigeria.