According to the latest data from the Nigerian Upstream Petroleum Regulato­ry Commission (NUPRC), average daily crude oil production slipped to 1.39 million barrels per day (mb/d) in September—ex­cluding condensates—marking a second consecutive monthly decline. The figure represents the weakest output since February 2024, when production was 1.32mb/d. ­

When condensates of around 0.19mb/d are included, total liq­uid hydrocarbon output for the month stood at 1.58mb/d. Still, this remains well below the gov­ernment’s target of 2.06mb/d set in the 2025 federal budget.

NUPRC attributed the decline primarily to a three-day strike by the Petroleum and Natural Gas Senior Staff Association of Nigeria (PENGASSAN), which disrupted activities across multi­ple export terminals. The strike, combined with scheduled main­tenance work at key facilities and unplanned shutdowns at several production and export points, cur­tailed output across major fields.

“The decline in September’s production figures largely reflects temporary disruptions across the upstream segment,” a NUPRC of­ficial familiar with the data said.

“While some of these factors were short-term, the cumulative impact was significant enough to drag overall national output.”

Among the affected termi­nals, Forcados, operated by Shell Petroleum Development Compa­ny (SPDC), recorded the steepest drop. Daily crude output from the terminal plunged to 1.47mb/d, underscoring the magnitude of operational bottlenecks facing Nigeria’s most productive export routes.

The Forcados system has long been critical to Nigeria’s crude export profile, handling volumes from multiple joint venture part­ners and independent producers. Frequent disruptions—whether from leaks, vandalism, or mainte­nance—have historically translat­ed into sizable losses in national production.

The persistent shortfall in pro­duction has raised fresh concerns about Nigeria’s ability to meet its 2025 fiscal projections, which are heavily dependent on crude oil revenue. Over the first nine months of the year, the country’s average output stood at 1.67mb/d, significantly below the govern­ment’s benchmark of 2.06mb/d.

This gap between actual and projected output not only threat­ens fiscal performance but also constrains Nigeria’s foreign ex­change inflows, which are still largely oil-dependent despite on­going diversification efforts.

Economists warn that the im­plications could be far-reaching. “Each barrel lost translates into real fiscal pressure,” said Johnson Chukwu, CEO of Cowry Asset Management. “With oil account­ing for the bulk of Nigeria’s for­eign exchange and a large share of government revenue, any sus­tained production deficit means less funding for critical infrastruc­ture and higher borrowing needs.”

Chukwu added that even with the Central Bank of Nigeria’s (CBN) ongoing reforms aimed at stabilising the naira, weaker oil in­flows could slow reserve accretion and put fresh strain on the curren­cy in the medium term.

Nigeria’s production woes come at a time when the global oil market is grappling with its own set of challenges. A bearish turn in prices, triggered by OPEC+’s de­cision to raise production targets, has sparked oversupply concerns, dampening investor sentiment across oil-dependent economies.

Brent crude, which had traded above $90 per barrel earlier in the year, has recently slipped below $80 amid renewed fears of supply glut and slower global demand recovery.

Analysts say the current mar­ket dynamics could complicate Nigeria’s fiscal outlook, especially if prices remain under pressure.

“Global oil prices are facing downward momentum at pre­cisely the wrong time for Nigeria,” said Razia Khan, Chief Economist for Africa and Middle East at Standard Chartered. “The com­bination of lower volumes and softer prices means weaker fiscal buffers and less room for policy manoeuvre.”

Adding to the uncertainty are lingering geopolitical risks. Although trade tensions between the United States and China have temporarily eased, analysts cau­tion that unresolved disputes could re-escalate, further damp­ening global demand for crude oil.

Nigeria’s oil sector had shown signs of recovery earlier in the year, with production inching clos­er to 1.7mb/d between March and June following improved pipeline surveillance and reduced vandal­ism in the Niger Delta. However, that fragile recovery appears to be faltering again.

Industry sources say that beyond temporary disruptions, structural challenges persist— ranging from aging infrastructure to delays in joint venture cash calls and security concerns along key pipeline routes.

“The strike was just a spark,” noted an industry executive who requested anonymity. “The deep­er problem is that Nigeria’s up­stream infrastructure is old and vulnerable. Maintenance sched­ules often overlap with produc­tion windows, and when you add industrial unrest, the cumulative effect is damaging.”

The executive added that re­storing production to budgeted levels would require sustained investment, improved industrial relations, and faster implementa­tion of reforms under the Petro­leum Industry Act (PIA), which aims to enhance regulatory stabil­ity and attract fresh capital into the sector.

For a country where oil receipts still account for over 70 percent of export earnings, a prolonged dip in production could strain fiscal and external positions. Analysts warn that without a rebound in output, the Federal Government could face a wider budget deficit and increased borrowing pressure in the final quarter of 2025.

Lower oil output also means fewer inflows into the Federation Account Allocation Committee (FAAC), which distributes reve­nue to federal, state, and local gov­ernments. This could complicate subnational budgeting and delay critical infrastructure spending across the country.

Meanwhile, the external reserves—currently hovering around $42 billion, according to re­cent CBN data—could come under renewed pressure if oil exports and prices remain weak through the last quarter of the year.

“Foreign exchange liquidity has improved modestly due to CBN reforms, but it remains highly sensitive to oil market per­formance,” said Ayodele Akin­wunmi, Senior Relationship Man­ager at FSDH Merchant Bank. “A combination of lower production and subdued oil prices could re­verse the gains achieved in recent months.”