Crude oil production by the Organisation of Petroleum Exporting Countries (OPEC) remained steady last month before the onset of new supply cutbacks by the group and its allies, with Nigeria boosting output by 50,000 bpd, a survey by Bloomberg has found.
The survey was based on ship-tracking data, information from officials, and estimates from consultants, including Kpler Ltd., Rapidan Energy Group, and Rystad Energy A/S.
OPEC pumped an average of 28.05 million barrels a day in December as it persevered with supply restraints agreed earlier in the year as reductions by the United Arab Emirates and Angola were offset by other countries such as Nigeria.
“Supply declines from these two members were tempered by increases elsewhere. Nigeria bolstered supplies by 50,000 barrels a day to 1.49 million a day in December, in line with a revised quota that it successfully negotiated for this year,” the report said.
Nigeria’s last data published by the Nigerian Upstream Petroleum Regulatory Commission (NUPRC) showed that the country produced 1.25 million bpd, referring to its “direct communication” channels.
But based on secondary sources, quoted by OPEC, Nigeria’s crude oil output was 1.37 million bpd in November. The NUPRC and OPEC are yet to release the country’s output data for December.
However, Bloomberg said that output was set to fall further this month, as the wider coalition known as OPEC+ begins additional cuts of roughly 900,000 barrels a day in a bid to stave off a new surplus and defend flagging crude prices.
Oil futures have slumped roughly 20 per cent since they neared $100 a barrel four months ago, amid surging supplies from the US and OPEC’s other rivals.
The extra crude could prove too much for global fuel demand, which is projected to see considerably slower growth this year.
The UAE made last month’s biggest supply reduction, cutting by 70,000 barrels a day to 3.08 million barrels a day. That still left the country’s output above its quota for December, and also higher than a new, increased target that takes effect this month.
Angola’s production declined once again in the country’s final month as an OPEC member, dwindling by 40,000 barrels a day to 1.1 million a day. Luanda announced late last month it would quit the cartel, effective January 1, ending 16 years of membership amid a bitter dispute over its production quota.
The West African nation refused to accept a reduced limit imposed by OPEC’s leaders, but its output in December — eroded by years of underinvestment — was in line with the level it had rejected.
Crude traders are skeptical that the 22-nation OPEC+ alliance will fully deliver on the fresh supply curbs taking effect this month, as many members have already lost as much production — and associated revenue — as they can afford.
The International Energy Agency (IEA) estimates the pledged cutback will translate into an actual cut of about 500,000 barrels a day.
Iraq, which has a patchy track record on implementation and pressing financial needs for export revenue, would need to cut production by a substantial 290,000 barrels a day to meet its target for January.
OPEC+ will hold an online monitoring meeting to review market conditions on February 1, and ministers are scheduled to meet in person at the group’s Vienna headquarters in early June.
Meanwhile, Goldman Sachs has projected that oil prices might double if Houthi rebels’ attacks on commercial shipping, which have happened more than 20 times since November, continue.
In an interview with CNBC, the head of the company’s oil research division, Daan Struyven said: “The Red Sea is a transit route, and with a prolonged disruption there, oil can be three or four dollars higher.
“However if you have a disruption in the Strait of Hormuz for a month, prices would rise by 20 per cent and could even eventually double if the disruption there lasted for longer,” he said.
Despite caveating that the situation was “highly unlikely”, Struyven’s comments joined a collective of voices from across international business and politics decrying the situation in recent days.
Former Prime Minister now Foreign Secretary, David Cameron said in an interview with Sky News that the attacks “have to stop”. “This is not just a British interest, it is global,” he added.
Since November, the rebels have attacked commercial shipping in the Red Sea more than 20 times using missiles, drones, fast boats, and helicopters.
Emmanuel Addeh in Abuja
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