Nigeria suffered a setback in its effort to meet its Organization of Petroleum Exporting Countries (OPEC) crude oil quota in November, under-producing by as much as 3 million barrels in the whole of the month compared to October.
According to the OPEC figures released on Wednesday, the country self-reported production of 1.25 million barrels per day in November, compared to 1.35 million bpd the previous month.
This amounted to a loss of 100,000 bpd, resulting in a deficit of 3 million barrels for the entire 30 days of November.
Nigeria has struggled to meet its OPEC quota for over three years, blaming oil theft, asset vandalism as well as waning investment in the oil sector as some of the reasons for the challenge.
However, the 1.25 million bpd excluded condensates which are outside OPEC’s computation of total crude oil produced during any month. The Minister of State, Petroleum Resources (Oil), Senator Heineken Lokpobiri, has insisted that Nigeria will surpass 1.7 million bpd in 2024.
Giving an overview of Nigeria’s economy in Q3, 2023, OPEC said the country’s 3.1 per cent y-o-y increase, surpassing the 2.6 per cent y-o-y growth in Q2, 2023 and 2.4 per cent y-o-y in Q1, 23, was attributable to strong activity in the non-oil sectors, especially in services and agriculture.
“However, there are concerns about inflationary pressures in Nigeria, with the inflation rate reaching 27.3 per cent y-o-y. This acceleration is largely attributed to persistent second-round effects following the removal of petrol subsidies and the devaluation of the naira.
“The current inflation rate compares to 26.7 per cent y-o-y in September and 25.8 per cent in August” it said, stressing that Nigeria faces a “challenging economic situation ahead.”
OPEC also said it remained cautiously optimistic about 2024 oil market fundamentals and blamed “exaggerated concerns” about demand for a recent drop in prices, as it stuck to its relatively high 2024 oil use prediction.
Oil has weakened to a six-month low near $72 a barrel, even after OPEC+, which includes OPEC oil-exporting nations and allies such as Russia, on November 30 announced a new round of production cuts for the first quarter of 2024.
But in the monthly report, it said it remained “cautiously optimistic about the fundamental factors affecting oil market dynamics in 2024” and said speculators had played a major role in pushing prices lower.
“Crude oil futures prices experienced a significant downturn, marked by heavy selloffs amidst a highly volatile futures market,” OPEC said.
“The market dynamic was fuelled by exaggerated concerns about oil demand growth, which negatively impacted market sentiment,” it added.
The cartel kept its forecast for world oil demand growth in 2023 steady at 2.46 million bpd. In 2024, OPEC sees demand growth of 2.25 million bpd, also unchanged from last month.
OPEC+ oil producers have been cutting production since late 2022 to support the market in a series of steps. The OPEC report noted that OPEC oil production fell in November, ending a series of increases.
Iran, exempt from OPEC supply cuts because of US sanctions, has been boosting output in 2023 in a trend that analysts say appears to be the result of Iran’s success in evading the sanctions and US discretion in enforcing them.
Nigeria and Angola have been recovering from internal challenges that have limited their output.
But in November, OPEC pumped 27.84 million bpd, down 57,000 bpd from October, the report said, citing figures from secondary sources, as production in Iraq, Angola and Nigeria decreased.
A Reuters survey had earlier on December 6 put OPEC output last month close to the level at 27.81 million bpd.
Saudi Arabia, which extended a voluntary cut of 1 million bpd into the first quarter of 2024 as part of the November 30 OPEC+ deal, told OPEC that it cut production by 122,000 bpd to 8.818 million bpd in November.
