In the recently released Organization of the Petroleum Exporting Countries (OPEC) Monthly Oil Market Report (MOMR), there were series of changes in outlook for the global Oil market. The changes cover both the demand and supply side. On the demand side, OPEC changed its estimate from the earlier anticipated 5.96mbpd in August to 5.8mbpd in September.

The organization premised the downward revision on the consistently lower than-expected actual demand performance so far in 2021. On the supply side, it is expected that supply would reduce by 0.3mbpd. The reduced supply expectation is based on the force majeure in Canada, production outages in the US following Hurricane Ida, and the ongoing maintenance in the Tengiz field in Kazakhstan.

The onset of the coronavirus pandemic in 2020 resulted in a slump in global demand for energy, which caused a significant decline in oil prices (BRENT and the West Texas Intermediate) to an all-time low. The development prompted the institution of production cuts by OPEC+ to support prices. The supply control has been useful given that it has helped moved prices to historical-highs.

Despite the rising prices, however, Nigeria, grappling with technical issues has not been able to maximize the rising prices to buoy export proceeds significantly. In the last quarter, daily production was reported at an average of 1.27mbpd (ex-condensate), following the dip in output that commenced since Q2 2021. The recent 8000bpd rise in September compared with August points to increasing production. Nonetheless, there are still rooms for concern.

While the continued recovery in global economies and current events portend an increase in crude oil prices, downside risks will always exist, and we continue to reiterate our agelong clamour for economic managers to adequately diversify the country’s export earnings particularly exploring opportunities in mining and agriculture.

While we laud the current initiatives of the Nigerian Export Promotion Council to grow export, the degenerating state of the local business environment characterised by infrastructure deficit and high level of insecurity will remain a clog in the wheel in the actualisation of the council’s initiative.

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