Nigeria Oil Production Rises to 1.390mbpd on Renewed Hope

Nigeria Oil Production Rises to 1.390mbpd on Renewed Hope

Nigeria’s hope is renewed as crude oil production volume rose to 1.390 million barrels per day (mbpd) in September 2023, according to a monthly report by the Organisation of Petroleum Exporting Countries (OPEC), from 1.249 mbps in the previous month. 

The increase of 141,000 barrels per day translates to more foreign receipts for the country that depends largely on hydrocarbon sales to grow the economy.

Since June, oil production volume has been ascending as President Bola Tinubu’s reforms took centre stage. The global oil market rallied in September on an expectation of higher demand that pushed prices upward.

According to details from the OPEC report, Saudi Arabia and Iraq were higher crude oil producers in the month. Saudi boosted overall OPEC production by 9006 mbpd, an increase of 82,000 per day while Iraq pushed 4307 mbpd, up by 15,000 per day.

Kuwait’s production volume increased to 2576 mbpd. Volume supplied by Angola, Congo and Equatorial Guinea plunged, but Algeria’s supply surged in the same month.

The Organisation of Petroleum Exporting Countries (OPEC) crude oil production rose in September compared to August due to a surge in volume from Nigeria, according to the group’s latest Monthly Oil Market Report (MOMR) published on Thursday.

According to the MOMR, OPEC’s crude oil production rose to 27.755 million bpd in September—up 273,000 bpd from the 27.482 million bpd the group produced in August.

Based on the report’s secondary sources, the largest increase in production was from Nigeria, which saw a 141,000 bpd increase month over month. Saudi Arabia also saw a production increase, of 82,000 bpd. Other OPEC members saw an increase, although smaller, including Algeria, Iran, Iraq, Kuwait, Libya, and the UAE.

Nigeria’s trade balance improved markedly in 2Q23 amid increasing non-oil exports and declining imports. A weaker exchange rate suppressed imports, but encouraged non-oil exports.

With the naira losing nearly 40% of its value since May, Nigeria posted a trade surplus of NGN 1,741.1 billion in June 2023, compared to a deficit of N116.5 billion in June 2022.  Inflationary pressures increased, as the annual inflation rate climbed to 25.8% y-o-y in August, coming from 24.1% in July.

This represents the highest rate since September 2005 and can be attributed to structural reforms, including the removal of fuel subsidies, the devaluation of the official exchange rate, and challenges in food-producing regions.

Meanwhile, Gasoline crack spreads in Rotterdam decreased, affected by subdued demand from the US and West Africa, as gasoline exports to West Africa were reported to have declined by around 28% following the fuel subsidy removal in Nigeria.

Although gasoline refinery output levels declined with the start of heavy turnarounds, this supportive factor was outpaced by the decline in demand, which resulted in strong gasoline stock builds in the Atlantic Basin.

“Going forward, gasoline crack spreads are set to remain under pressure with the onset of the colder season. However, this downside risk will be challenged by the ongoing refinery maintenance season and the subsequent decline in gasoline production levels, which could partially offset some of the aforementioned weaknesses”, OPEC said in the report. #Nigeria Oil Production Rises to 1.390mbpd on Renewed Hope Naira Devaluation Deepens Economic Crisis in Nigeria