Nigerian crude dipped early this week after OPEC+ indicated a modest production increase for November and northern Iraq resumed exports, raising concerns of a potential oversupply despite elevated prices.

Bonny Light hovered around $69 per barrel as oil prices fell sharply at the start of the week.

Reports suggest that the eight OPEC+ members who had voluntarily cut output may announce their next production boost for November, while northern Iraq’s exports restarted over the weekend.

As a result, the market expects oil prices to face significant downward pressure in the coming year.

While OPEC+’s production increases are widely seen as a move to regain market share, the group can take comfort in knowing the market can absorb additional supply if the front end of the curve remains in backwardation.

As the global oil market moves into a surplus, time spreads are expected to come under increased pressure.

Under a two-year extension agreement, the Nigerian National Petroleum Company will supply the Dangote Refinery with five crude cargoes each in September and October, raising deliveries to 300,000 barrels per day to help reduce Nigeria’s dependence on fuel imports.

The $20 billion refinery, operational since January 2024, is expected to stop importing crude by year-end and eventually process up to 650,000 barrels per day at full capacity.

According to NNPC, crude supplied to the refinery owned by Aliko Dangote, has totaled 82 million barrels since October 2024, with 60 percent of those deliveries settled in naira.

Last year, Nigeria agreed to sell 445,000 barrels of crude per day to the Dangote Refinery in local currency to ease pressure on the naira and help stabilize domestic fuel prices.

The federal government described the arrangement as a pilot project that could be expanded to include other domestic refineries.