A review of global oil prices early on Wednesday, 13th of September, 2023 has shown that Brent crude is at $92.28 per barrel, and even with the rise. Nigeria has failed to significantly increase its oil production.
In August, the Nigerian Upstream Petroleum Regulatory Commission (NUPRC) reported a daily oil production of 1.4 million barrels, but analysts said, when condensate is excluded from the figure, the output drops to 1,181,133 barrels per day.
This quantity appears quite modest when juxtaposed with Nigeria’s substantial oil reserves, estimated at 38 billion barrels.
Although production continues to drag, oil price has been relatively stable in 2023. This year, the key assumptions in the country’s 2023 budget include an oil price benchmark of $75 per barrel; exchange rate at N435. 57 per dollar; oil production of 1.69 million barrels per day and inflation rate of 17.16 per cent.
The latest Monthly Oil Market Report from the Organization of Petroleum Exporting Countries (OPEC) presented a different perspective, indicating that Nigeria’s crude oil production, excluding condensates, amounted to only 1.1 million barrels per day.
Since the beginning of 2023, Nigeria’s crude oil production has ranged from its highest at 1,292,240 barrels per day in February to its lowest at 1,004,392 barrels per day in April.
Industry experts, however, noted that, when condensate production is factored alongside the figures from January to August 2023, the range extends from its peak of 1,534,654 barrels per day in March to its lowest point of 1,252,114 barrels per day in April.
Evidently from these statistics Nigeria is therefore yet to meet its budget benchmark of 1.69 million barrels per day for 2023.
In contrast, the non-oil sector has exhibited substantial recovery, as highlighted in the OPEC report. This recovery is characterised by significant growth in services, manufacturing, and agricultural output during the second quarter of 2023.
The Nigerian economy has continued to grapple with high inflation. In July, inflation rates continued to rise, registering an annual rate of 24.1 per cent year-on-year, following 22.8 per cent in June and 22.4 per cent in May.
Nigeria’s oil sector lacks significant investments and stakeholders are currently battling crude oil theft.
The Nigerian National Petroleum Company Limited (NNPCL) has consistently reported weekly crude oil theft incidents across the Niger Delta oil-producing areas.
Security agents are tackling the problem by destroying vessels and other materials used in the illegal trade, yet the theft industry keeps waxing stronger, leading to the loss of 400,000 barrels of oil daily, according to the National Security Adviser, Nuhu Ribadu.
The OPEC report also noted that among the top four oil producers in Africa, Nigeria (1.18 million) is still producing more than Angola (1.12 million), and Algeria (939,000). Although, it fell behind Libya (1.19 million) as of August 2023.
According to the OPEC report, the 2023 world oil demand growth forecast of 2.4 million barrels a day, mb/d remains consistent. Within the Organization for Economic Cooperation and Development (OECD) region, OPEC anticipates a 0.1 mb/d increase in oil demand for 2023.
Meanwhile, in the non-OECD region, they expect oil demand to surge by approximately 2.3 mb/d, but looking ahead to 2024, the projection for global oil demand growth remains robust at 2.2 mb/d, mirroring the assessment from the previous month.
According to the OPEC report, the non-OPEC liquids supply growth forecast for 2023 has been slightly increased to 1.6 mb/d.
The primary contributors to this growth in liquid supply for 2023 are the United States, Brazil, Norway, Kazakhstan, Guyana, and China. Looking ahead to 2024, the projection for non-OPEC liquids production remains steady at 1.4 mb/d, consistent with the previous month’s assessment.
In 2024, the key drivers of liquid supply growth are expected to be the United States, Canada, Guyana, Brazil, Norway, and Kazakhstan.
According to secondary sources, OPEC-13 crude oil production in August saw a month-on-month increase of 113 thousand barrels per day (tb/d), reaching an average of 27.45 mb/d.
Recently, concerns have emerged regarding potential supply constraints in the oil market.
These concerns predominantly stem from ongoing production cuts in Saudi Arabia and Russia, which have been extended through the end of the year.
Additionally, other contributing factors to these supply fears may include the economic deceleration in China and the recent coup in Gabon, Libya’s Storm Daniel which has led to the shutdown of oil terminals.
These elements collectively create a complex landscape for oil supply dynamics, warranting close monitoring and analysis in the coming months.