Oil price hits $84.29 per barrel despite OPEC’s prediction
Oil price jumped over 3percent, hitting $84.29 per barrel on Wednesday, January 12, 2022, casting doubts on the Organisation of Petroleum Exporting Countries’ (OPEC) , predictions of a surplus supply and its ability to respond to an increase in demand.
As at noon Wednesday, West Texas Intermediate (WTI) was trading at $81.94 per barrel, and Brent crude oil, Nigeria’s benchmark was trading at $84.25 per barrel, the highest level this year.
The rising crude oil price according to analysts is credited to the OPEC and its allies, OPEC+’s inability to ramp up production output at 400,000 bpd. OPEC + has been unable to achieve this volume in any month.
For December, the smaller OPEC group managed to increase output by just 70,000 bpd up from November, quite shy of the 253,000 bpd that was its share of the 400,000 bpd hike that OPEC+ agreed to.
The market responded to the reports that OPEC+’s spare capacity will dwindle into the second half of the year as it gradually increases output targets between now and then at the rate of an additional 400,000 bpd each month.
Nigeria, Libya, Angola, Gabon, Equatorial Guinea are Africa’s biggest oil producers and have consistently failed for months to meet their OPEC allocation.
Libya that has displaced Angola as Africa’s second-largest oil producer is also having production challenges embroiled in some turmoil.
Nigeria has experienced a drop in crude oil production over the last three months, failing to meet the 1.6mbpd cap placed on it by OPEC.
Nigeria has been battling with production drop due to outage at the Trans Forcados terminal, a major export hub for Nigeria, downtime on major pipelines, crude oil theft and several operational challenges leading to production capacity constraints in the assets.
Under the OPEC’s production agreement, Nigeria is expected to produce 1.66 million barrels a day of crude. In the 2022 budget, the country’s crude output stands at 1.88 million barrels per day (bpd) despite the quota from OPEC.
The Chief Executive Officer Nigerian Upstream Regulatory Commission (NURC), Gbenga Komolafe, has hinted that Nigeria would raise the bar of crude and gas production from the current level of 1.4 million to 2.4 million bpd.
According to him, NURC would not only do everything possible to shore up the nation’s oil production quota and boost investments in the upstream segment, but also deliver a 21st Century upstream petroleum regulator anchored on principles of effective and efficient services, transparency, professionalism and cost consciousness.
The Minister of State, Mr. Timipre Sylva and the NNPC Group Managing Director, Mallam Mele Kyari, at different occasion had promised that the country would hit between 1.7 million barrels per day and 1.8 million barrels per day by the end of 2021, but this were unrealised up till January 2022.
Seplat Energy, an indigenous oil exporter reported in its third quarter results that production was back up following the reopening of the Trans Forcados Pipeline.
“Production has recovered strongly since the outage at Forcados Oil Terminal (FOT) and we have been averaging nearly 33kbopd liquids throughout October. Now that production has normalised, we expect production to be in the range 48-50 kboepd for the year, provided uptime on the Forcados Pipeline and FOT remains above the budgeted 80,” Seplat Energy said.