Given the latest oil market fundamentals, the Organization of Petroleum Exporting Countries has raised Nigeria’s crude oil production quota for September 2022 to 1.83 million barrels per day (mb/d) as it Jacks up Production Levels to keep up with market demand.
The decision by the 13-member international oil organization to increase oil production levels by 100,000 b/d will be one of the smallest since OPEC quotas were introduced in 1982, according to OPEC data, and is in line with the organization’s assessment of the current oil market condition.
This is according to the press release made by the organization on the 31st OPEC and non-OPEC Ministerial Meeting which was held via video conference on 3 August 2022.
Data from OPEC shows that Nigeria’s oil production quota was increased marginally by 0.22 percent from 1.826 mb/d in August to 1.83 for September, this figure was 1.799 mb/d in July.
OPEC has been raising production quotas over the past few months to complement the shortages in oil production caused by the disruption linked to Russia’s invasion of Ukraine. However, it has been struggling to meet up with production targets as most of its members under-investment in new capacity constrained output potential.
Also, as of June, OPEC+ production was almost 3 million barrels per day below its quotas as sanctions on some members and low investment by others crippled its ability to boost output, according to Reuters.
At the meeting, the organization noted that “chronic underinvestment in the oil sector has reduced excess capacities along the value chain (upstream/midstream/downstream).”
It was also highlighted with particular concern that “insufficient investment into the upstream sector will impact the availability of adequate supply in a timely manner to meet growing demand beyond 2023 from non-participating non-OPEC oil-producing countries, some OPEC Member Countries, and participating non-OPEC oil-producing countries.”
Nigeria has not been meeting its OPEC oil production quota. According to OPEC, crude oil production in Nigeria stood at 1.238 million barrels per day (b/d) in June 2022, significantly lesser (45 percent) than the June 1.799 mb/d production quota. Similarly, Nigeria’s oil production in May was a staggering 1.158 mb/d.
As oil prices stayed above $100/ barrel for several months following the geopolitical issues in Europe, Nigeria is supposed to enjoy a windfall gain from the booming industry however, constrained output capacity has been a major impediment.
At the meeting, it was also noted that “preliminary data for OECD commercial oil stocks level stood at 2,712 mb in June 2022, which was 163 mb lower than the same time last year, and 236 mb below the 2015-2019 average, and that emergency oil stocks have reached their lowest levels in more than 30 years.”