The Organisation of  Petroleum Exporting Countries (OPEC) in its Monthly Oil Market Report for September 2022, said   the figure represents a decrease of 64,000 barrels per day when compared with 1.164mbpd average production in the month of July.

“According to secondary sources, total OPEC-13 crude oil production averaged 29.65 mb/d in August 2022, higher by 618 tb/d m-o-m. Crude oil output increased mainly in Libya and Saudi Arabia, while production in Nigeria declined,” OPEC said.

Despite having about 37 billion barrels of crude oil reserves, Nigeria has been struggling to meet its OPEC+ quota of about 1.8mbpd. The country’s inability to meet its quota has been attributed to years of underinvestment, high cost of production, poor infrastructure and oil theft in the Niger Delta.

While oil price has remained elevated since 2021, Nigeria is not cashing in on the current market situation because of low production and excess expenses on petrol subsidies. Crude oil accounts for about 90 percent of the country’s foreign exchange earnings and about 70 percent of its revenues. The country’s inflation rate rose to 19.64 percent in the month of July 2022 compared to 18.6 percent recorded in the previous month, with food inflation accelerating to 22.02 percent  from 20.6 percent recorded in June, according to the National Bureau of Statistics (NBS).

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“Nigeria’s real GDP expanded by 3.5 percent y-o-y in 2Q22, following growth of 3.1 percent in 1Q22. The expansion was mainly driven by the non-oil sector, which grew by 4.8 percent y-o-y. On a quarterly basis, the GDP shrank by 0.37 percent following a 14.66 percent contraction in the previous quarter.

Nevertheless, the annual inflation rate surged to the highest since September 2005, climbing to 19.6 percent y-o-y in July from 18.6 percent in June. This was a result of the weakening naira due to continued high imported input costs as well as soaring fuel prices,” OPEC explained.

“Moreover, food inflation increased to 22 percent y-o-y, the highest since May 2021. Reflecting these pressures, August’s Stanbic IBTC Bank Nigeria PMI dropped to 52.3 from 53.2 in July amid slower growth in non-oil output as well as the  slowdown in purchasing activity, while employment rose at a quicker pace. Looking ahead, Nigeria’s economy might keep be impacted by the high level of employment associated with elevated prices levels,” it noted.

According to OPEC, world oil demand for 2022 is expected to rise by 3.1 mbpd, y-o-y unchanged from last month’s report, adding that gas-to-oil substitution for power generation and for industrial uses in the Organisation for Economic Cooperation and Development (OECD) Europe and Asia represents an important component of the demand outlook for the year.

“Total oil demand is projected to average 100.0 mb/d in 2022,” OPEC stated.  “In the OECD region, oil demand is anticipated to rise by 1.6 mb/d to 46.4 mb/d y-o-y. OECD Americas demand is expected to rise the most in 2022, led by the US on the back of recovering gasoline and diesel demand. Light distillates are also projected to support demand growth this year.

“In the non-OECD region, total oil demand for the year is anticipated to rise by 1.5 mb/d to 53.7 mb/d. A steady increase in industrial and transportation fuel demand, supported by a recovery in economic activity and an easing of COVID-19 restrictions in China, are projected to boost demand in 2022.

“In 2023, expectations for healthy global economic growth, combined with anticipated improvements in the containment of COVID-19 in China, are expected to boost oil consumption. The demand outlook for 2023 remains at 2.7 mb/d, unchanged from the last MOMR, and reach 102.73 mb/d.”

Also during month under review,  the OPEC Reference Basket of 13 fell by $6.65, or 6.1 percent, to settle at $101.90/b. The Brent front-month declined by $7.38, or 7.0 percent, to average $97.74/b. While the West Texas Intermediate (WTI) fell by $7.90, or 7.9 percent, to average $91.48/b. Consequently, the Brent-WTI futures spread widened by 52¢ to an average of $6.26/b.