Nigeria, Africa’s most populous country and largest oil producer, is pushing for increased oil output despite a recent drop in crude prices. Brent crude prices dipped to $80 per barrel, with U.S. West Texas Intermediate crude futures down 0.5% at $75 per barrel.
The decline in crude prices comes in the wake of a delayed ministerial meeting by the Organization of the Petroleum Exporting Countries (OPEC+) and its allies, including Russia. This postponement was prompted by disagreements over output targets for African producers, particularly Nigeria and Angola. Both nations are seeking to boost oil production to support their economies, with over 80% of Nigeria’s national income derived from crude oil.
Recent data indicates some positive signs in Nigeria’s energy sector, as the oil and gas sector showed a 0.85% moderation in the third quarter, a significant improvement from the 13.43% contraction recorded in the same quarter in 2022.
Nigeria, the source of the well-known Bonny Light crude, is striving to reach its 2024 output goal, aiming for 1.8 million barrels per day by the end of the year. Angola, on the other hand, has yet to meet its scheduled 2024 production levels.
The disagreement within OPEC+ has led experts to predict a persistently negative market sentiment. Despite expectations that Saudi Arabia may continue voluntary supply cuts into 2024, the uncertainty surrounding production limitations remains a key factor.
In the oil futures market, short sellers are betting on the United Arab Emirates increasing exports of its Murban crude, anticipating barrels to be diverted to the international market due to refinery maintenance and a new OPEC+ mandate.
Meanwhile, a recent oil leak from TotalEnergies’ offshore Egina Floating Production Storage and Offloading (FPSO) vessel on November 15 temporarily disrupted the demand/supply dynamics in Nigeria’s oil market. The FPSO, located 130 KM off the Atlantic coast from Port Harcourt, has a daily production capacity of 200,000 barrels of crude oil and holds 23 million barrels on board. The cleanup of the spill, which resulted in the loss of about 3,000 barrels of crude oil, is still ongoing, according to Mr. Idris Musa, the director general of the National Oil Spills Detection and Response Agency (NOSDRA).