Nigerian Crude Oil Prices Surge Amid Iraq Drone Attacks, Nearing Budget Benchmark
Written by Okafor Joseph
July 21, 2025 – Nigerian crude oil prices are climbing closer to the Federal Government’s 2025 budget benchmark, driven by heightened geopolitical tensions in the Middle East. A wave of drone attacks on oil facilities in Iraq’s Kurdistan region has sparked fears of global supply disruptions, boosting market sentiment and oil prices.
As of Friday, Nigeria’s key crude grades – Bonny Light, Brass River, and Qua Iboe – were priced at $72.50 per barrel, just $2.50 below the government’s benchmark of $75. The surge follows a series of explosive-laden drone attacks on major oilfields in northern Iraq, including Tawke, Peshkabir, and Sarsang, resulting in production halts and heightened regional instability.
Reports indicate that oil output in Iraqi Kurdistan has dropped to between 140,000 and 150,000 barrels per day, down from its typical 280,000 bpd, further tightening global supply. Although no group has officially claimed responsibility, Iran-backed militias are suspected of orchestrating the attacks.
In response to rising demand, global oil consumption hit an average of 105.2 million barrels per day in the first half of July, up by 600,000 bpd year-on-year, meeting market expectations.
Amidst this global market tension, Nigeria is pushing for a 25% increase in its OPEC+ crude production quota, seeking to raise its cap from 1.5 million to 2 million barrels per day. According to Bashir Ojulari, CEO of the Nigerian National Petroleum Company Limited (NNPCL), this adjustment is critical to meeting both domestic and international energy demands.
Despite chronic issues such as pipeline vandalism and oil theft, Nigeria’s crude output in June exceeded its OPEC quota for the second time in 2025, reaching an average of 1,505,474 bpd, according to the Nigerian Upstream Petroleum Regulatory Commission (NUPRC). Combined crude and condensate production hit 1.7 million bpd, up from 1.65 million bpd in May.
Domestically, fuel demand continues to rise following the full-scale operations of the 650,000 bpd Dangote Refinery, which has created new supply hubs and spurred calls for unrestricted crude production.
In a further boost to Nigeria’s oil sector, ExxonMobil has pledged $1.5 billion in deepwater exploration, while Shell and TotalEnergies are preparing to increase output from Nigerian-led projects. Shell’s Bonga North deepwater field is expected to come online by 2027, and TotalEnergies aims to commence gas production at the Ubeta field within the same timeframe.
Globally, Brent crude futures rose to $69.81 per barrel, with West Texas Intermediate (WTI) trading at $68, as traders react to the combination of Middle East instability and strong summer fuel demand. Oil derivatives markets have seen record-high open interest and trading volumes, underscoring market volatility and renewed investor interest.
Analysts predict that tight fundamentals will continue supporting oil prices in the near term. However, unresolved issues such as U.S. trade tariffs, expected to linger until at least August 1, and potential OPEC+ output increases post-summer could add uncertainty and pressure to global prices.
With Nigerian crude prices nearing the budgeted threshold and global market forces intensifying, the coming months may prove critical for Nigeria’s oil-driven economy.
