Nigeria’s missed oil windfall deepens strain

Nigeria has forfeited a potential revenue surge from elevated crude prices during the Iran war because it could not raise production enough to match the market opportunity, according to Dele Oye, chairman of the Alliance for Economic Research and Ethics, who said the lost upside could amount to about $20.2 billion a year. He argued that Brent’s climb far above Nigeria’s budget benchmark should have delivered a major fiscal cushion, but weaker output left the country exposed instead of enriched.

Oye said Nigeria should have been earning substantially more while oil traded above $100 a barrel, with Brent in a range he put at $102 to $114 against a budget benchmark of $64.85. In his assessment, the gap represented a theoretical windfall of roughly N28.3 trillion annually. He said the problem was not the absence of favourable prices but the inability to pump enough crude to convert that price rally into public revenue, warning that billions were slipping away during a period when other producers moved to capture the gains.

That critique has landed at a moment of exceptional volatility in global energy markets. Reuters reported that the war involving Iran has disrupted supply through the Strait of Hormuz, a route that normally carries about one fifth of global oil and LNG transport, driving the sharpest jump yet in 2026 oil price forecasts. A Reuters survey showed Brent’s average forecast for 2026 rising to $82.85 a barrel from $63.85 in February, while daily market moves pushed prices much higher during March, with Brent ending the month near $119 after a record monthly gain. The International Energy Agency separately said hostilities that began on 28 February sent Brent close to $120 a barrel and disrupted nearly 20 million barrels a day of crude and product exports.

Nigeria, however, was not in a position to fully exploit that shock. Oye said output was running at 1.46 million barrels per day against a 1.84 million target, leaving a shortfall of about 380,000 barrels a day. Separate reporting citing OPEC secondary sources showed Nigeria’s crude production in February at about 1.31 million barrels per day, down from roughly 1.45 million in January and below its quota by around 190,000 barrels a day. Reuters, meanwhile, reported that Nigeria was one of the few OPEC producers to increase output in March even as wider disruption cut the group’s production sharply, yet that relative rise still did not place the country in the category of a major swing supplier capable of harvesting the full price spike.

Officials and market participants have offered a more mixed picture of Nigeria’s capacity. Bashir Bayo Ojulari, group chief executive of Nigerian National Petroleum Company, told Reuters on 23 March that the country could raise output by about 100,000 barrels a day over the next few months. He said Nigeria averaged around 1.6 million to 1.7 million barrels a day last year and was hoping to average 1.8 million this year. That points to some room for improvement, but it also underlines how far Nigeria remains from the spare capacity held by top Gulf producers. Oye’s criticism, therefore, sits alongside an official argument that gains are possible, though incremental rather than transformational in the short term.

Domestic conditions have made the lost opportunity more politically charged. Nigeria’s fuel market has been hit by the same international shock that inflated crude prices. Reuters reported that pump prices in the country have risen by 65%, the steepest increase among major African economies, even though the Dangote Petroleum Refinery is now operating at full scale. The 650,000 barrel-a-day refinery was expected to reduce pressure on imported fuel, but it still needs more crude than domestic suppliers have consistently allocated, forcing it to buy imported barrels at high premiums. On 31 March, Reuters reported that NNPC had increased May cargo allocations to Dangote from five to seven, though the refinery needs roughly 13 to 15 cargoes a month.

That mismatch has sharpened a long-running national debate over whether Nigeria’s oil sector problems are structural rather than cyclical. Older output declines were linked to theft, vandalism and under-investment, and those weaknesses continue to shadow the sector. Even as the central bank has eased foreign-exchange rules to let oil companies retain full export proceeds in a bid to improve cash flow and investor confidence, the broader challenge is whether policy reform can translate into sustained upstream growth quickly enough to matter during a fleeting price boom.