Oil Output Decline and the Political Economy of Resource Governance in Nigeria

Abstract

Nigeria Africa’s largest crude oil producer has experienced a persistent decline in oil output over recent years, undermining national revenue, fiscal stability, and long-term development goals. In December 2025, Nigeria’s total oil output (including condensate) fell to approximately 1.544 million barrels per day, representing an 8.3% year-on-year decline and below its Organisation of Petroleum Exporting Countries (OPEC) production quota of 1.5 million bpd. This shortfall deepens the fiscal gap relative to the federal government’s 2025 budget benchmark of 2.06 million bpd, raising concerns about revenue volatility and resource governance capacity in the petroleum sector (NUPRC, 2026). The oil sector remains central to Nigeria’s political economy: it accounts for roughly two-thirds of government revenue and over 90% of foreign exchange earnings. Yet structural governance challenges, ranging from insecurity, oil theft, underinvestment, and regulatory fragmentation to weak oversight continue to constrain production and investor confidence. This brief examines the political and economic drivers of the output decline, evaluates government interventions, assesses socio-economic impacts, and offers actionable recommendations to curb the menace. Addressing the dare impacts oil output decline in Nigeria and ensuring effective resource governance, this brief hereby recommends the following: i. The National Assembly through its relevant Committees, Senate and House Committee on Petroleum Resources Downstream, Midstream, and Upstream, through oversight functions may wish to mandate quarterly legislative hearings with the Nigerian Upstream Petroleum Regulatory Commission (NUPRC), the Nigerian National Petroleum Company Ltd (NNPCL), and security agencies to track oil output performance, oil theft prevention, and proper implementation of the Petroleum Industrial Act (PIA) 2021, provisions. ii. The National Assembly may wish to utilize oversight function to enhance security and community engagement by Legislating clear frameworks for community policing, revenue-sharing mechanisms that incentivize local protection of oil infrastructure, and stronger penalties for sabotage and theft.