June 22, 2024

Nigeria, Russia drops oil output by 440,000 bpd in March, as OPEC+ suffers biggest production decline

Oredola Adeola

Nigeria and Russia have accounted for the 440,000 bpd drop in crude oil production of the Organization of the Petroleum Exporting Countries (OPEC) and its allies -OPEC+ for March 2023, this is according to an assessment by Energy Intelligence, seen by EnergyDay on Monday.

The report indicated that OPEC and its allies recorded the biggest decline in their collective production in 10 months, as output fell by 680,000 barrels per day (bpd) to 37.64 million bpd.

The crude oil production from the OPEC+ group fell to levels last seen in May 2022, with the cartel’s volume falling to 2.5 million bpd below its targeted collective production quota.

EI revealed that the magnitude of the drop by OPEC+ recorded in March 2023, was the largest gap between overall quota and actual production since October last year.

EnergyDay’s check showed that Nigeria’s crude oil production growth dipped to 2.95 percent month-on-month, in March 2023, to 1,268,202 barrels per day(bpd) from 1,306,304 bpd recorded in February 2023, based on the latest crude oil production status released by the Nigerian Upstream Petroleum Regulatory Commission (NUPRC).

The country’s crude oil production level returned to below 1.3mpd mark after a six-month upward growth momentum.

That development was attributed to so many factors including the just concluded general election and shut-in that happened in March, following an explosion on Rumuekpe-Nkpoku trunk line, owned by Petroleum Development (SPD) Company of Nigeria Limited, SPDC’s – a section of the Trans Niger Pipeline (TNP) in Rivers State.

The production decline level was a setback to the country’s prospect of hitting 1.69mbpd, the 2023 budget crude oil production target, while also falling short of its OPEC production quota of 1.8 million bpd.

On April 2, 2023, some OPEC+ members, led by Saudi Arabia and other major Middle Eastern producers, announced a fresh combined production cut of 1.16 million bpd between May and December, in what was described as a precautionary measure aimed at supporting the stability of the oil market.

The 1.16mbpd cut plus Russia’s 500,000 bpd cut which was extended until the end of the year, will be bringing the cartel’s total volume of cut to 3.66 million, translating to 3.7 percent of global demand.

That significant cut shot global Brent crude oil price up from almost $ 70 per barrel to $84.16bp (8% high).
The over 440,000 bpd by the two countries is expected to be seen as a welcome development by the Opec leaders, as they look to constrain supply given the headwinds for projected demand growth this year.

Citi’s Morse had in a recent interview with Bloomberg said, “To get to $100 oil we have to have significantly more oil taken out of the market.”

Morse’ suggestions showed that disruptions in supply from Nigeria, Saudi Arabia, Iran, Iraq, Libya, and Russia, needs to continue altogether at the same time without certainty as to when that oil can come back to the oil market.