Nigeria’s oil sector underperformed in the opening months of 2026, missing production targets by about 16.6 million barrels, underscoring persistent structural constraints that continue to limit the country’s ability to benefit from elevated crude prices.
Data released by the Nigerian Upstream Petroleum Regulatory Commission (NUPRC) on Tuesday show that combined crude oil and condensate output stood at roughly 92 million barrels in January and February, compared with a projected 108.6 million barrels based on the federal government’s benchmark of 1.84 million barrels per day.
The figures highlight a widening gap between policy targets and actual output at a time when global oil prices, supported by geopolitical tensions, have hovered between $110 and $120 per barrel.
On a daily basis, production trends weakened over the period. In January, total liquids output averaged about 1.63 million barrels per day, around 210,000 bpd below the government’s benchmark. The shortfall deepened in February, when output fell to 1.48 million bpd, widening the gap to roughly 360,000 bpd.
The decline was driven primarily by weaker crude oil production, which accounts for the bulk of Nigeria’s output. Crude volumes dropped from an average of 1.46 million bpd in January to about 1.31 million bpd in February, according to the NUPRC data.
Condensate production, which is exempt from Organization of the Petroleum Exporting Countries (OPEC) quotas, offered limited support but was insufficient to offset the fall in crude output.
Production declines were also recorded across major export terminals, including Qua Iboe, Bonny, Forcados, Escravos and Brass, reflecting operational and structural challenges that continue to weigh on supply.
The underperformance comes despite relatively favourable market conditions. Oil prices have remained elevated amid ongoing geopolitical tensions involving Iran, Israel and the United States, creating an opportunity for producers to boost revenues. Nigeria’s inability to scale up output, however, has constrained its capacity to capture these gains.
Recent industry data point to continued volatility in production levels. Earlier reports indicated that crude output rose to about 1.459 million bpd in January, maintaining Nigeria’s position as Africa’s largest producer, though still below its OPEC quota. That momentum reversed in February, with output declining by about 10.7 per cent month-on-month to 1.31 million bpd.
The fluctuations underscore longstanding challenges in Nigeria’s oil sector, including infrastructure constraints, pipeline disruptions and operational inefficiencies, which have kept production below potential levels.
There are, however, expectations of a modest recovery in the coming months. The Group Chief Executive Officer of the Nigerian National Petroleum Company Limited, Bashir Bayo Ojulari, has indicated that output could increase by about 100,000 barrels per day, suggesting a gradual stabilisation if current interventions take hold.
Nigeria’s fiscal position remains closely tied to oil production volumes and global price trends. Higher output, combined with strong prices, typically translates into increased government revenue, improved foreign exchange inflows and stronger external reserves.
For 2026, the federal government set an ambitious production target of 2.6 million barrels per day, while adopting a more conservative benchmark of about 1.8 million bpd for budget planning.
Even against the lower benchmark, current production levels fall short, implying foregone revenue at a time when elevated crude prices could have provided fiscal relief.
The shortfall in February, in particular, signals downside risks to revenue projections if production does not recover quickly. With oil still accounting for a significant share of government income and export earnings, sustained underperformance could widen fiscal gaps and add pressure on external balances.
While authorities and industry operators continue efforts to ramp up output, the latest data reinforce the scale of the challenge. Without consistent improvements in production, Nigeria risks missing a window of opportunity to strengthen its fiscal position during a period of high global oil prices.