Domestic Macroeconomy: Nigeria Records Second-Highest Crude Production in 2025… Disinflation Outcome Stretches to Third Consecutive Month
This week, we dissect the crude oil production data from the Nigerian Upstream Petroleum Regulatory Commission (NUPRC), the OPEC Monthly Oil Market Report (MOMR), and the Consumer Price Index (CPI) data by the National Bureau of Statistics (NBS).
Starting with the crude oil production related subject, both the NUPRC data and OPEC’s MOMR affirmed that Nigeria’s daily average crude oil production improved by 3.6% m/m in June 2025 to 1.5 million barrels per day (mbpd). By adding condensate, total output cleared at 1.7mbpd, marking a 2.4% increase in average crude oil and condensate production over the previous month.
The June crude oil production performance marked the second highest monthly average in 2025, with January’s 1.54mbpd performance (1.74mbpd including condensate) still the strongest. Output rebound from major terminals – Forcados (up 9.5% m/m to 8.8mbpd), Odudu (up 9.0% m/m 20 2.1mbpd), Qua Iboe (up 2.3% to 5.1mbpd), and Bonny (up 1.0% to 7.2mbpd) – more than offset losses from Brass (down 15.0% m/m to 0.9mbpd), Escravos (down 8.7% m/m to 4.2mbpd), and Tulja-Okwuiboime (down 4.5% m/m to 2.1mbpd) terminals.
Contextualising the economic impact of the modest improvement in the crude oil production level for the month (excluding condensate as there is no formal pricing guide), we estimate that Nigeria earned a daily average revenue of $105.0m in June from its crude oil production (given average price of $69.73/bbl), representing a 13.6% improvement over May.
Prior Five Months
Relative to the prior five months, our estimate suggests that the daily average revenue for June is the third highest after January ($122.3m at average price of $79.46/bbl) and February ($112.5m at average price of $76.81/bbl).
Nonetheless, all the monthly average production and the estimated daily average revenue generated trailed the benchmark set by the FG in the 2025 budget – 2.0mbpd and $154.5m. The June production numbers, though an improvement over May, reaffirm our projection in the H2:2025 macroeconomic outlook report titled “Beyond the Rhetorics: Statistical Gains, Social Strain” that FG’s oil revenue for the year would underperform by at least 19.6%. Interestingly, the oil revenue target is to account for a disproportionate 51.3% share of the ambitious ₦40.9tn projected revenue for the year.
The attendant implication of the derailing oil revenue projection is that FG’s actual deficit for the year would exceed the ₦14.1tn captured in the approved budget (estimated expenditure: ₦55.0tn; projected revenue: ₦40.9tn) by no less than 22.0% even if revenue target from other sources is completely attained.
To mitigate the impending impact of this revenue underperformance, we reiterate that the FG should optimise the capacity of the state to fully secure oil installations from vandals, and hope that international price dynamics will tilt further towards the targeted benchmark or surpass it.
Shifting gears, in line with our forecast, NBS data revealed that disinflation momentum continued for the third straight month in June 2025, as y/y headline inflation rate slowed to 22.2% from 23.0% in May. This slowdown in the y/y headline rate was driven by the core inflation sub-component (which measures the price dynamics of all items less farm produce and energy) to 24.1% from 24.5% in May. Conversely, the food inflation sub-component rose by 83bps to 22.0% y/y, reversing the downtrend experienced in the three preceding months.
Meanwhile, on a m/m basis, the headline rate cleared at 1.7% as against 1.5% in May. This signalled that the y/y performance was largely impacted by low base year effect, as m/m reading is more reflective of current market price dynamics. Equally concerning, m/m food inflation came in at 3.3%, marking a sharp jump from the 2.2% recorded in May. The core inflation rate was also elevated at 2.5% as against 1.1% in May. We believe festivity-induced price uptick, especially on food and transportation during the Eid-el Kabir celebration, more than offset the relief from the modest Naira gain (Naira gained 3.7% in June to close at ₦1.529.71/$).
Bringing all of this together, we maintain our position in the recently published H2:2025 outlook report that CPI rebasing impact on the base year would largely support a sustained decline in the headline inflation rate till the end of Q3’2025, thereby causing a divergence between statistical reading and consumers’ experience on the street. Against this backdrop, our model projects the headline rate to ease to 21.6% in July, though m/m reading is expected to increase to 1.75% as against 1.68% in June.
Domestic Equities Market: Banking Stocks Fuel Gains… ASI up 4.3% w/w
The NGX sustained its bullish momentum for the eighth consecutive week, buoyed by broad-based investor interest, particularly in the Banking sector. This week’s rally was largely driven by renewed confidence in the banking space, following two landmark developments: FBN Holdings Plc witnessed a massive ₦323 billion block trade as long-time shareholders Oba Otudeko and Tunde Hassan-Odukale exited. Simultaneously, UBA surged to a new all-time high of ₦46.05/share, buoyed by investor optimism ahead of its interim dividend and the announcement of a ₦157 billion rights issue, aimed at strengthening its capital base in line with CBN’s recapitalization drive.
Consequent to the aforementioned developments as well as valuation repricing across other sectors ahead of midyear earnings releases, the All-Share Index rose 4.3% w/w to close at 131,585.21 points, while market capitalisation hit a new high of ₦83.2tn (up 4.3% w/w), pushing YTD return to 27.8% (up from 22.6% the previous week). Market activity improved markedly, with average volume and value traded surging 3.1x and 4.8x w/w, respectively, to 4.4bn units and ₦125.2bn. Banking stocks dominated both volume and value charts: FCMB (2.7bn units), ACCESSCORP (658.4m units), and UBA (362.0m units) led by volume, while FCMB (₦26.0bn), ZENITH (₦21.8bn), and ACCESSCORP (₦17.5bn) topped the value chart.
Performance across sectors under our coverage was bullish, as four indices booked weekly gains, while two lost. Leading the gainers, the Industrial Goods and Banking indices gained 19.2% and 5.4% w/w, following price appreciation in BUACEMENT (+31.3%), DANGCEM (+16.5%), STANBIC (+18.4%), and ACCESCORP (+8.3%). Following, the Consumer Goods and AFR-ICT indices rose 1.3% and 0.6% w/w respectively, as NESTLE (+20.0%), NASCON (+12.0%) MTNN (+1.3%), and CWG (+1.6%), posted weekly gains. On the flipside for the Insurance and Oil & Gas indices declined by 3.6% and 0.8% w/w following selloffs in NEM (-9.1%) WAPIC (-9.0%), MRSOIL (-4.1%) and OANDO (-2.3%).
Investor sentiment as measured by market breadth weakened to -0.1x from 1.5x the prior week as 46 stocks gained, 52 lost, and 44 closed flat. EUNISELL (+32.6%), BUACEMENT (+31.3%) and ABCTRANS (+28.4%) led the top gainers, while ACADEMY (-24.3%), RTBRISCOE (-22.7%) and CUTIX (-19.6%) led the underperforming stocks. Next week, we expect continued investor interest in the equities market, driven by the kick-off of the corporate earnings season.
Afrinvest
