Nigeria’s crude oil is now selling for less than $65 per barrel, dipping below the Federal Government’s benchmark price, as global oil markets come under renewed pressure from rising production levels and geopolitical uncertainty.
The drop follows a decision by the Organization of the Petroleum Exporting Countries and its allies (OPEC+) to raise oil output by 411,000 barrels per day in June—the second increase in as many months—despite softening demand and bearish market sentiment. Brent crude also slipped below $62 per barrel, reflecting widespread unease about oversupply and weak buying interest.
Traders report that Nigerian crude cargoes scheduled to load on May 10 remain unsold, underscoring the tepid appetite for West African oil. Market analysts point to high freight costs, a backwardated pricing structure (where future prices are lower than current prices), and concerns over weaker-than-expected demand as key factors driving the slowdown.
OPEC+ defended its decision to ramp up production following a brief online meeting, arguing that “market fundamentals are healthy and global inventories remain low.” Still, the move has rattled investors and traders who were hoping for tighter supply to stabilize prices.
The Saudi-led push for deeper production cuts earlier this year, meant to enforce stricter compliance among members like Iraq and Kazakhstan, appears to have lost momentum. Instead, the group is bowing to pressure from major consuming nations, including the United States, where President Donald Trump has urged OPEC+ to increase output to help lower global energy costs. Trump is expected to visit Saudi Arabia later this month.
Meanwhile, broader geopolitical developments are adding to the oil market’s volatility. Speculation about a potential thaw in U.S.-Iran relations or progress in Russia-Ukraine peace talks could flood the market with additional supply, dampening any prospects for a price rebound.
Kazakhstan has already signaled its intention to prioritize national interests over OPEC+ commitments, further complicating the coalition’s efforts to coordinate supply cuts. Despite a 3% drop in April output, the Central Asian country exceeded its production quota.
The June production hike will bring total increases over three months to 960,000 barrels per day—roughly 44% of the 2.2 million bpd production cut agreed upon in December. These cuts are scheduled to be gradually phased out by April 2025, although some could stretch to 2026.
Adding to the market’s unease are the lingering tensions in U.S.-China trade relations. Although Beijing is reportedly considering a proposal from Washington to resume talks on tariffs, Trump’s recent threats to impose secondary sanctions on buyers of Iranian oil have stoked fears of further supply disruptions.
As oil traders brace for more volatility, all eyes are on the next full OPEC+ ministerial meeting, slated for May 28, where members are expected to review the impact of recent decisions and chart a course forward.
