Nigeria is confronting fresh challenges to its crude oil production ambitions even as global oil prices have surged well above the Federal Government’s 2026 budget benchmark, raising questions about the country’s capacity to maximise export earnings amid persistent operational and security constraints.

While international crude prices have rallied on tightening global supply and geopolitical tensions, pipeline vandalism, oil theft, operational disruptions, and chronic underinvestment continue to limit Nigeria’s output, preventing the country from fully capitalising on the favourable market conditions.

Nigeria’s combined crude oil and gas production averaged 1,735,398 barrels per day (bpd) in June 2026, marking the fourth consecutive month of growth and exceeding the country’s OPEC crude oil production quota for the first time in more than six years. However, renewed hostilities in the Strait of Hormuz are expected to intensify pressure on Nigeria to ramp up production to help offset global supply shortfalls.

Available records show that Nigeria lost an estimated $839.22 million in oil revenue in the first four months of 2026 after failing to meet its 1.5 million barrels per day (mbpd) OPEC quota. Data from the Nigerian Upstream Petroleum Regulatory Agency (NUPRC) showed average crude oil production of 1.56 mbpd in the period, with condensate output at 0.18 mbpd.

The 1.56 mbpd crude-only figure marks Nigeria’s highest monthly output since April 2020 — a 74-month high.

Oil prices jumped more than 3.5percent following fresh exchanges between the U.S. and Iran that escalated tensions over the Strait of Hormuz. In early European trading, Brent crude rose 3.6percent to $78.76 per barrel, while WTI futures climbed 3.6 per cent to $73.99 per barrel, according to reports.

“Escalation has slowed vessels transiting the strait to a trickle, renewing concerns over oil supply tightness through the third quarter,” analysts at ING said. “The risk is that this escalates to levels seen early in the war, where neighbouring countries and their energy infrastructure are also targeted,” report stated.

Industry leaders who spoke at the recently concluded 2026 Nigeria Oil and Gas (NOG) Energy Week in Abuja acknowledged recent reforms but warned that significant structural hurdles remain before Nigeria can sustainably hit its three million bpd target.

Mr. Ainojie ‘Alex’ Irune, Managing Director of Oando Energy Resources, described the three million bpd goal as “deliberately ambitious but technically achievable” if the country protects existing production while accelerating new developments.

“Nigeria is currently producing only about 70 per cent of its technical production capacity, indicating substantial untapped potential,” Irune said. “We have established that the capacity to produce more exists. The real question is whether, as a country, we have the discipline and urgency to achieve that goal,” he said.

He noted that obstacles such as insecurity, delayed cash call payments, and regulatory uncertainty have eased under the Petroleum Industry Act and recent Executive Orders, but sustained implementation is essential.

“The first responsibility is to protect the production base. Once we stop the decline in existing assets, we can begin to unlock additional production and future projects,” he said.

Irune highlighted that while Nigeria’s share of Africa’s upstream investment has risen sharply from about four per cent to nearly 40 per cent in two years, the country faces critical gaps in fabrication yards, skilled geoscientists, and technical personnel.

“If Nigeria attracts the $20 billion annual investment needed to reach three million barrels per day, we simply do not have enough geoscientists to evaluate the reservoirs, nor enough fabrication capacity to execute the projects. The supply chain challenge goes beyond equipment; it is also about people,” he said.

Mr. Kola Karim, Chairman and Chief Executive Officer of Shoreline Group, pointed to ageing facilities, inadequate financing, and weak evacuation infrastructure as key bottlenecks. Citing Oil Mining Lease (OML) 30, he stressed the need for aggressive drilling and rehabilitation of obsolete assets.

“Some of the compressors on these assets were installed in 1979. They are older than many of us. Without renewing these facilities, increasing production becomes extremely difficult,” Karim said.

He added: “There is no point drilling more wells if you cannot evacuate the oil. Pipeline integrity, infrastructure renewal and reliable evacuation systems are fundamental to achieving three million barrels per day.”

Karim called for greater collaboration among indigenous operators, citing the Renaissance Africa Energy Company consortium as a model, and emphasised sustained community engagement and security improvements in the Niger Delta.

The current oil price has comfortably overshot Nigeria’s 2026 budget benchmark of $64.85 per barrel. Brent crude recently rose 3.8 per cent to $78.86 per barrel, while WTI increased 4.1 er cent to $74.36 per barrel amid disruptions in the Strait of Hormuz. Market watchers await the next OPEC Monthly Oil Market Report for further clarity on supply dynamics.

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