Like in previous months, Angola, Algeria and Libya again pushed Nigeria to the fourth position in October, as Africa’s ‘biggest’ oil producer struggles with sundry issues which have hobbled it’s capacity to meet the Organisation of Petroleum Exporting Countries (OPEC) oil quota.
While in the month under review, Algeria drilled 1.060 million barrels per day, Angola produced 1.051 million bpd, Libya’s output was 1.163 million while Nigeria’s oil production stood at 1.024 million bpd.
Although Nigeria added 77,000 bpd in October, it wasn’t enough to return the country to the top of the table as Africa’s biggest producer, even though Algeria gained a paltry 2,000 bpd, Angola lost 40,000 bpd and Libya gained 6,000bpd (secondary source).
Production in Angola saw the second-steepest drop in OPEC producers in October, but it wasn’t the result of a conscious reduction since the African producer has been lagging behind its quota for many months.
The OPEC figures released in its latest Monthly Oil Market Report (MOMR) yesterday, indicated that Nigeria’s roughly 1 million bpd is also a far cry from its average of 1.493 million bpd in 2020, a covid year, and 1.323 million in 2021.
On the economic front, OPEC stated that Nigeria’s economic outlook has been impacted by the devastating rains and floods that affected 31 of Nigeria’s 36 states and has resulted in a significant loss of land, lives and livelihoods.
The latest data, it said, suggested that record-high inflation continues to persist, even after a recent 150 bps rate hike by the central bank.
OPEC noted that September’s annual inflation rate accelerated to 20.77 per cent from 20.52 per cent in August, stressing that upward price pressures were mainly caused by supply disruptions amid the widespread flooding and higher import costs.
However, considering the broad money-supply growth of 21 per cent y-o-y in August, the organisation said that there is a significant monetary component behind the inflationary spiral.
“ A sustained accumulation of outstanding business suggests that hiring activity could continue in the months ahead. However, the inflationary pressures are suppressing consumption spending, which might weigh on the growth of household volume consumption,” it added.
Meanwhile, OPEC has made another cut to its global oil demand growth forecast, trimming around 100,000 bpd from its projections for both 2022 and 2023.
This year’s growth is now pegged at 2.55 million bpd, compared with a previous forecast for 2.64 million bpd, OPEC said.
OPEC added that the downgrade was underpinned by the extension of China’s zero-Covid restrictions and “some economic challenges in OECD Europe that have weighed on oil demand.”
The Chinese government last week again reinforced the need to stick with its zero-Covid policy, although it urged more targeted restrictions, oilprice reported.
The cartel expects global oil demand next year to be supported by the containment of Covid-19 in China and by geopolitical improvements, but it has cut its growth forecast regardless, to 2.24 million bpd from 2.34 million bpd.
It reduced its 2022 forecast for oil supply growth from non-OPEC producers by 30,000 bpd to 1.9 million bpd, with upwards revisions for Russia and Latin America.
“It should be noted, however, that considerable uncertainty remains with regard to Russia’s liquids output in (the fourth quarter of 2022),” OPEC said.
In addition, OPEC’s crude oil production dropped by 210,000 barrels per day (bpd) in October compared to the previous month after the cartel and the wider OPEC+ group reversed the small output increase in September.
The crude oil production of all 13 OPEC members, including those exempt from the OPEC+ pact – Venezuela, Iran, and Libya – averaged 29.49 million bpd in October, according to secondary sources.
Saudi Arabia, saw its production decline by 149,000 bpd to average 10.838 million bpd last month, as OPEC+ decided in early September to reverse a 100,000 bpd increase in target oil production, which was only intended for the month of September.
Over the coming months, OPEC’s production is set to decline further after the OPEC+ alliance decided to reduce its collective target by 2 million bpd for November.
Although the actual cut is expected to be around half that number, at 1.1 million bpd, it still is the biggest cut since the record production reduction announced in April 2020 when oil demand plunged at the start of the pandemic.