The Organisation of Petroleum Exporting Countries (OPEC) in its Monthly Oil Market Report (MOMR) for April, 2022, released on Tuesday, showed that Nigeria’s crude oil production declined average of 22,000 barrel per day in March 2022 to 1,238million barrels per day (bpd) based on direct source and 1,354mbpd( secondary sources to OPEC) from February 1,258mbpd(direct source) and 1,378Mbpd(secondary source).
According to OPEC’s secondary sources, total OPEC-13 crude oil production averaged 28.56 mb/d in March 2022, higher by 57 tb/d m-o-m. Crude oil output increased mainly in Saudi Arabia, Kuwait and the UAE, while production in Libya, Nigeria and Congo declined.
The OPEC Monthly Oil Market Report (MOMR) covers major issues affecting the world oil market and provides an outlook for crude oil market developments for the coming year. The report provides a detailed analysis of key developments impacting oil market trends in world oil demand, supply as well as the oil market balance.
The report noted that Nigeria’s average production in 2020, 2021 and 2021( first Quarter 2022) was 1,575mbpd, 1,372mbpd and 1,382mbpd respectively.
OPEC in data obtained by direct communication from Nigeria showed that the country in January 2022 produced 1,399mbpd, in February production averaged 1,258mbpd, and in March 2022, production was 1,238mbpd.
The report claimed the country’s crude production for January, February and March 2022, stood at 1,413 mbpd, 1,378Mbpd and 1,354mbpd respectively from OPEC’s secondary sources.
This however showed that Nigeria’s crude oil production reduced by 20 thousand barrels per day (tb/d) between February and March, whereas it reduced by 141,000 bpd between January and February, 2022.
According to secondary sources, total OPEC-13 crude oil production averaged 28.56 mb/d in March 2022, higher by 57 tb/d m-o-m. Crude oil output increased mainly in Saudi Arabia, Kuwait and the UAE, while production in Libya, Nigeria and Congo declined.
Crude oil futures prices soared in March extending the previous month’s large gains. The market continued to be driven by rising concerns about a potential large oil supply shortage amid escalating geopolitical tensions in Eastern Europe, as well as supply disruptions in the Caspian.
On the economic side, OPEC report revealed that following a contraction of 1.8% y-o-y in 2020, Nigeria’s economy expanded by 3.6% in 2021. This economic recovery according to OPEC is most likely to continue over the course of 2022 with support from improvements in the hydrocarbons sector and energy prices.
The report said, “ Recent official data suggested that the annual inflation rate edged up slightly to 15.7% in February 2022 from 15.6% in January 2022, although food inflation remained elevated. Indeed, higher food costs related to geopolitical tensions could further fuel inflation.
“In March 2022, the overall business improvement softened as Stanbic IBTC Bank Nigeria’s PMI suggested, indeed it dropped to 54.1 from 57.3 in February. Yet, the overall prospects for Nigeria’s short-term economic outlook remain positive, despite concerns over inflationary pressures amid disruptions to global trade flows and supply shortages.
“After many stagnant months, VLCC spot rates finally registered a noticeable increase in March, gaining 28% on average m-o-m, with rates moving higher across all reported routes compared to the previous month. Gains were supported by improving sentiment amid an expected increase in demand for long haul routes, as well as a need to quickly shift toward alternate supply. Rising bunker fuel prices also pressured rates higher.
On the freight side , the report disclosed that vessel movement from Nigeria to Asia spot rates rose 22 percent m-o-m to average WS44 in March. Compared with the same month last year, rates were 26% higher.
Freight rates on the Nigeria and other West African countries to the United States Gulf Coast (USGC) route increased by 28% m-o-m in March to average WS82. Compared with the same month last year, rates were 32% higher
On the Middle East-to-East route, rates rose 26% m-o-m to average WS44 points and were 47% higher y-o-y. Rates on the Middle East-to-West route also increased, up 35% m-o-m to average WS23 points. This represented a y-o-y gain of 10%.
Crude differentials of light and medium sweet crude also rose in the Mediterranean and West African markets in March on robust buying interest from European buyers.
However, the high value of the Brent benchmark compared to other major benchmarks of WTI and Dubai, high freight rates, and a steep Brent backwardation, limited the rise. Crude differentials of Bonny Light, Forcados and Qua Iboe rose on a monthly average in March by 20¢, 49¢, and 58¢, respectively, to stand at premiums of $1.82/b, $2.75/b, and $2.70/b.