By Ikenna Omeje
The Organisation of Petroleum Exporting Countries (OPEC) has said that Nigeria’s oil sector dropped by 19.8 percent year-on-year in the fourth quarter of 2020, after a 13.9 percent year-on-year contraction in the third quarter of the same year.
The largest crude oil cartel in the world, which stated this in its Monthly Oil Market Report for May 2021, released recently, also said that the country’s real Gross Domestic Product (GDP) grew by 0.1 percent year-on-year in 2020.
According to the report, the non-oil sector grew by 1.7 percent, after a decline of 2.5 percent in the third quarter of 2020, adding that the growth was driven by growth in the telecommunications and information services sectors.
The report also showed that the country’s economy contracted by 1.9 percent year-on-year in 2020, following a 2.3 percent year-on-year expansion in 2019. It further showed that on a quarterly basis, Nigeria’s GDP grew by 9.7 percent, following 12.1 percent growth in the third quarter of 2020.
“Nigeria’s real GDP grew by 0.1 percent y-o-y in 4Q20, following a 3.6 percent contraction in 3Q20. This was the first positive quarterly growth in the last three quarters amid the gradual return of economic activities. The non-oil sector expanded 1.7 percent, recovering from a 2.5 percent decline in 3Q20, mainly driven by growth in the telecommunications and information services sectors. Other important contributions came from the agricultural sector, which expanded by 3.4 percent y-o-y in 4Q20. Meanwhile, the oil sector dropped by 19.8 percent y-o-y after a 13.9 percent y-o-y contraction in 3Q20,” the report stated.
“On a quarterly basis, GDP grew by 9.7 percent, following 12.1 percent growth in 3Q20. In 2020, the economy contracted 1.9 percent y-o-y, following a 2.3 percent y-o-y expansion in 2019. In the meantime, the Stanbic IBTC Bank Nigeria PMI stood at 52.9 in April 2021, unchanged from March. Inflation was still structurally high, with the annual inflation rate jumping to 18.17 percent in March 2021, the highest rate since January 2017 amid the continued impact of the COVID-19 pandemic that has also weakened the currency. These inflationary pressures might slow the economic recovery in 2021.”
On the global oil demand, the report stated that it is assumed to have contracted by 9.5 million barrels per day (mb/d), unchanged from April’s assessment, and now estimated to average 90.5 mb/d for the year 2021.
It stated, “World oil demand is assumed to have contracted by 9.5 mb/d in 2020, unchanged from last month’s assessment, and is now estimated to average 90.5 mb/d for the year. OECD oil demand is estimated to have declined by 5.6 mb/d due to a large drop in OECD Americas and Europe, on the back of the COVID-19 pandemic. Similarly, non-OECD oil demand is estimated to have decreased by 3.9 mb/d, led by declines in Other Asia, Middle East and Latin America.
“For 2021, world oil demand is expected to increase by 6.0 mb/d, unchanged from last month’s estimate, to average 96.5 mb/d. Slower-than-anticipated demand in OECD Americas during the 1Q21 combined with the resurgence in COVID-19 infection cases in India and Brazil caused the 1H21 oil demand data to be downwardly revised. On the other hand, for the 2H21, positive weekly transportation fuels data from the US, and the acceleration in vaccination programs in many regions allows for optimism. The assumed return to normality and improved mobility will also positively influence regions such as the Middle East and Other Asia in 2H21.”
The report revealed that OPEC reference basket of 13 declined by $1.32, or 2.9 percent in April, while Bonny Light, Djeno, Es Sider, Girassol, Rabi Light, Sahara Blend, and Zafiro – fell $1.44l, or 2.2 percent, averaging $62.86/b, in the same month.
“The ORB declined $1.32, or 2.0 percent, m-o-m in April, but remained near its highest level since January 2020 at $63.24/b. All ORB components’ values decreased over the month alongside their respective crude oil benchmarks, with lighter grades slipping the most. Sour components fell less than the Dubai benchmark as the decline of these components was partly offset by higher official selling prices (OSP) towards the Asian market. The sweeter components fell more than Brent on lower OSPs and crude differentials. Y-t-d, the ORB value in April was 41.6 percent, or $17.91, higher than the same period in 2020 at $60.97/b. West and North African Basket components – Bonny Light, Djeno, Es Sider, Girassol, Rabi Light, Sahara Blend and Zafiro – fell $1.44 in April, or 2.2 percent m-o-m on average, to $62.86/b. The multiple regions’ destination grades – Arab Light, Basrah Light, Iran Heavy, and Kuwait Export – decreased by $1.30, or 2.0% m-o-m on average, to settle at $63.58/b. Murban crude declined by 98¢, or 1.5 percent m-o-m on average, to settle at $63.35/b, while the Merey component fell by 31¢, or 0.7 percent m-o-m on average, to settle at 46.16/b,” the report revealed.