Nigeria has increased its crude oil production by 50,000 bpd in December, according to a survey by Bloomberg which used ship-tracking data, information from officials, and estimates from consultants, such as Kpler Ltd., Rapidan Energy Group, and Rystad Energy A/S.
Nigeria, the largest oil producer in Africa, pumped 1.49 million barrels a day in December, in line with a revised quota that it successfully negotiated for this year.
The increase came at a time when other OPEC members, such as the UAE and Angola, reduced their output, keeping the group’s output steady at 28.05 million barrels a day.
“Nigeria’s output boost was a positive development for the country, which has been facing economic challenges due to the COVID-19 pandemic, low oil prices, and security issues. Nigeria relies on oil for about 90 per cent of its foreign exchange earnings and 60 per cent of its government revenue. OPEC has been implementing supply restraints since early last year, but oil prices have fallen by about 20 per cent since they reached $100 a barrel in September,” the report said.
The Nigerian Upstream Petroleum Regulatory Commission (NUPRC) reported that the country produced 1.25 million bpd in December, based on its “direct communication” channels.
However, OPEC’s secondary sources, which include independent analysts and government agencies, estimated Nigeria’s output at 1.37 million bpd in November. The NUPRC and OPEC have not yet published the country’s output data for December.
Bloomberg said that OPEC’s output would drop further this month, as the wider coalition known as OPEC+ starts additional cuts of about 900,000 barrels a day to prevent a new glut and support flagging crude prices. The extra crude could overwhelm global fuel demand, which is expected to grow much slower this year.
The UAE made the biggest supply reduction in December, cutting by 70,000 barrels a day to 3.08 million barrels a day.
However, the country’s output was still above its quota for December, and also higher than a new, increased target that takes effect this month.
Angola’s production fell again in its last month as an OPEC member, dropping by 40,000 barrels a day to 1.1 million a day.
The country announced late last month that it would leave the cartel, effective January 1, after 16 years of membership. Angola had a bitter dispute with OPEC’s leaders over its production quota, which it refused to accept. However, its output in December — eroded by years of underinvestment — was in line with the level it had rejected.
Crude traders are doubtful that the 22-nation OPEC+ alliance will fully deliver on the new supply curbs taking effect this month, as many members have already lost as much production — and associated revenue — as they can afford.
The International Energy Agency (IEA) estimates that the pledged cutback will translate into an actual cut of about 500,000 barrels a day.
Iraq, which has a poor track record on implementation and pressing financial needs for export revenue, would need to cut production by a significant 290,000 barrels a day to meet its target for January.
OPEC+ will hold an online monitoring meeting to review market conditions on February 1, and ministers are scheduled to meet in person at the group’s Vienna headquarters in early June.
Meanwhile, Goldman Sachs has projected that oil prices might double if Houthi rebels’ attacks on commercial shipping, which have happened more than 20 times since November, continue.
In an interview with CNBC, the head of the company’s oil research division, Daan Struyven said: “The Red Sea is a transit route, and with a prolonged disruption there, oil can be three or four dollars higher.