From Adanna Nnamani, Abuja
Nigerian crude prices have slumped below the federal government’s benchmark of $65 per barrel.
This comes as the Organisation of Petroleum Exporting Countries (OPEC) continues to raise production despite growing geopolitical uncertainties. Cargoes loaded with Nigerian crude recently remain unsold, highlighting a lack of interest from buyers and sellers in the face of fluctuating price trends in West African crude.
The flat differentials reflect a backwardated market structure coupled with rising freight costs. A premature move by Saudi Arabia and other OPEC+ members to implement deeper production cuts heading into the summer has dampened market sentiment, with Brent prices dipping below $62 per barrel.
The possibility of a U.S.-Iran rapprochement or a breakthrough in Russia-Ukraine peace talks are seen as the biggest threats to the oil market, which currently lacks strong bullish drivers. Despite this, OPEC+ has decided, for the second consecutive month, to increase oil production by 411,000 barrels per day in June, responding to signs of declining demand, falling prices and bearish market sentiment. The decision was made following an online deliberation that lasted just over an hour, with OPEC+ reassuring that “the fundamentals of the oil market are healthy, and inventories are low.”
In early April, oil prices plunged to a four-year low, dipping below $60 per barrel after OPEC+ unexpectedly announced an increase in production for May, compounded by looming US tariffs under President Trump.
Saudi Arabia’s aggressive push for deeper cuts has been aimed at ensuring better compliance from members such as Iraq and Kazakhstan, who have struggled to meet output targets.
OPEC+’s decision to increase production also comes amid pressure from President Trump, who has urged the group to raise output and is expected to visit Saudi Arabia by the end of May. An agreement made last December among eight OPEC+ members set a plan to gradually raise output caps and phase out restrictions, with a reduction of 138,000 barrels per day expected to end by April 2025.
The upcoming June increase will add to the total hike across April, May, and June, bringing the total to 960,000 barrels per day, representing 44% of the 2.2 million bpd production cut.
Kazakhstan’s energy minister has defied OPEC+ by stating the country would prioritize its national interests when determining oil production levels. Although Kazakhstan’s April output declined by 3%, it still exceeded its OPEC+ quota.
OPEC+ continues to reduce output by nearly 5 million barrels per day, with many cuts expected to continue until the end of 2026. A full ministerial meeting is scheduled for May 28.
Meanwhile, traders remain cautious over the US-China trade dispute after Beijing announced it would consider resuming talks on President Trump’s tariffs. Although optimism regarding US-China relations persists, signals remain tentative. Trump’s threat on Thursday to impose secondary sanctions on buyers of Iranian oil has added downward pressure on oil prices, raising concerns of a potential global supply shortage.