Nigeria’s economy expanded faster than expected in the second quarter, but its key oil sector is languishing despite booming prices.
Output from Africa’s largest crude producer fell to 1.43 million barrels a day in the three months through June, the lowest quarterly production since 2016, according to the nation’s statistics agency. The fifth consecutive quarter of declining output comes as rampant theft and vandalism prevent Nigeria from fully benefiting from the oil bonanza that followed Russia’s invasion of Ukraine.
The situation worsened at the start of the third quarter, with output in July dropping to 1.2 million barrels a day, the lowest in more than three decades. That’s way below the 1.799 million barrels a day that Nigeria was allowed to pump that month under an OPEC+ agreement.
While oil still accounts for more than 80% of Nigeria’s export earnings, it’s contribution to Africa’s biggest economy is declining. With the country hosting among the world’s highest number of people living in extreme poverty, that’s adding pressure for the government to turn around an industry, which has also suffered from policy uncertainty.
© 2022 Bloomberg