Nigeria’s fiscal stability is under pressure as crude oil production plummeted to its lowest level yet in 2025, raising the alarm bells about the country’s ability to fund its national budget and earn foreign exchange.
Data gleaned from the Nigerian Upstream Petroleum Regulatory Commission (NUPRC) revealed that Nigeria’s crude, blended and unblended condensate production declined by 68,177 barrels per day (bpd) in March.
Analysis of the report showed that Africa’s largest crude oil producer’s production declined to 1.60 million (bpd) from 1.67 million bpd in the period. Nigeria recorded 1.4 million bpd in crude production, with blended and unblended condensates standing at 55,827 barrels and 147,166 barrels, respectively.
A further analysis showed that the latest production is the lowest so far in the year, as Nigeria produced 1.74 million bpd in January and 1.67 million barrels in March, according to BusinessDay.
The report stated, “Lowest and Peak Combined crude oil and Condensate Production in March were 1.49 million bopd and 1.76 million bopd, respectively.
“The daily average production in March was 1,603,776 barrels per day, comprising both Crude oil (1,400,783 bopd) and condensate (202,993 bopd).”
The drop in production comes at a time when oil revenues remain a critical pillar of Nigeria’s economy, accounting for a substantial portion of the national budget.
With production falling well below OPEC quotas, the government faces mounting difficulties in meeting revenue targets, funding key developmental projects and earning dollars. The Nigerian government anchored its budget on a benchmark oil price of $75 per barrel and an ambitious production target of 2.06 million barrels per day.
This is amid the recent global oil price plunge on the back of the OPEC+ decision to accelerate production increases in May and U.S. President Donald Trump’s tariffs of at least 10 per cent and potential countermeasures.
Jide Pratt, COO of Aiona and country manager at TradeGrid, warned that this situation could result in increased borrowing, further swelling the nation’s debt profile. He said the current drop in oil prices exposes the country’s vulnerability to oil price shocks and underscores the urgency of economic diversification.
According to him, oversupply concerns, partly driven by the Organisation of Petroleum Exporting Countries’ decision to ramp up production, are also weighing on prices.
“Sadly for Nigeria, it means lower revenues, lower foreign reserves and with the cease of the naira-for-crude deal, then we could see an increase in foreign exchange rates which doesn’t help monetary or fiscal policies,” Pratt said.
He noted that Nigeria may be forced to revisit its 2025 budget assumptions of $75, turn to supplementary budgets or loans, and prioritise structural reforms to cushion the impact.
“There’s a need to give more attention to sectors like agriculture, trade, and fintech, and consider asset sales to the private sector to drive growth,” Pratt said.
The impact of dollar inflows could be dire. Nigeria earns 90 per cent of its foreign exchange earnings from oil exports. Any decline in oil export will hit Nigeria’s dollar earnings and revenue hard.
“There are several risks facing Nigeria’s fiscal sustainability,” said Ike Ibeabuchi, an emerging markets analyst.
“One is the declining oil output. Two is the falling oil price. Three is Donald Trump’s tariff, and four is the debt. If oil production continues to decline, dollar earnings will suffer, and the naira will weaken further. Also, Nigeria would struggle to fulfil its several obligations to creditors and the citizens.”
