The Organisation of Petroleum Exporting Countries (OPEC) yesterday expanded its global oil demand forecast for 2022 by almost one million barrels per day (bpd), to 100.83 million bpd. This was a 4.15 million bpd increase from the 2021 figure and a steep hike from the 3.28 million bpd growth projection it made last month.

Pegging its optimism of stronger pace of demand recovery on a steady economic outlook in all regions, OPEC stated that vaccination rates had continued to rise, while the COVID-19 pandemic was expected to be better managed, with economic activities and mobility expected to return to pre-pandemic levels.

Disclosing this in its September Monthly Oil Market Report (MOMR), the cartel further confirmed a THISDAY report earlier in the month that though paltry compared to its pre-COVID production figure of nearly two million bpd, Nigeria was unable to meet its oil production quota for the month of August.

Based on secondary sources, the OPEC document revealed that the country was unable to take full advantage of the latest adjustments by the oil producers’ group, and it lost a whopping 114,000 barrels per day in the month under review.

While crude oil output increased in Iraq, Saudi Arabia, the United Arab Emirates, and Angola, Nigeria was one of the three member countries, which were unable to fully pump their quotas, the rest being Congo with a deficit of 14,000bpd and Iran with 8,000 bpd.

The Flavision report had revealed that despite asking for a higher baseline in August, Nigeria failed to meet the existing quota assigned by OPEC, with the new figures now showing that the country may have lost over 3.5 million barrels of crude oil during the month alone.

Many of the shut-ins, it was gathered, were attributable to assets’ breakdowns, unresolved community issues, as well as shutdowns to carry out routine maintenance, although the Nigerian National Petroleum Corporation (NNPC) had recently said it was difficult to get its facilities back to production after they were closed down due to OPEC cuts imposed last year because of the pandemic.

But on its latest demand forecast, OPEC projected that the pandemic would affect demand in the near term and revised down its fourth-quarter demand forecast by 110,000 b/d, to 99.70mn bpd, as well as this year’s non-OPEC liquids supply growth to 170,000 bpd, lower than the forecast in last month’s report.

It trimmed its world oil demand forecast for the last quarter of 2021 due to the Delta coronavirus variant, saying a further recovery would be delayed until next year when consumption would exceed pre-pandemic rates.

OPEC said in the report, “The increased risk of COVID-19 cases primarily fuelled by the Delta variant is clouding oil demand prospects going into the final quarter of the year. As a result, second-half 2021 oil demand has been adjusted slightly lower, partially delaying the oil demand recovery into first-half 2022.”

On the back of the new report, oil prices rose for a second session on Monday, fuelled by concerns over shut output in the United States, following damage from Hurricane Ida.

Prices have risen over 40 per cent this year, boosted by economic recovery hopes and OPEC+ supply cuts, although concern about the Delta variant has weighed heavily on the optimism.

Brent crude rose 67 cents, or 0.9 per cent to $73.59 a barrel, and U.S. West Texas Intermediate (WTI) crude also added 66 cents, or 1 per cent, to $70.38, their highest since around September 3.

About three-quarters of the offshore oil production in the US Gulf of Mexico, or about 1.4 million barrels per day, have remained halted since late August, roughly equal to what OPEC member, Nigeria, produces.

Royal Dutch Shell Plc, the largest oil producer in the U.S. Gulf, on Thursday cancelled some export cargoes because of damage to offshore facilities from Hurricane Ida, signalling energy losses would continue for weeks.

In July, OPEC and its allies, known as OPEC+, agreed to gradually unwind record oil output cuts put in place last year due to the pandemic, by 400,000 bpd a month from August and confirmed the plan at their last meeting on September 1

On the overall Nigerian economy outlook, OPEC recalled that it grew by five per cent year-on-year in 2Q21, following expansion of 0.5 per cent y-o-y in 1Q21, describing the growth as the strongest since 4Q14.

OPEC said regarding the growth rate,

More importantly, it mirrors a stable economic recovery, as it marked a third quarter of expansion following a recession in 3Q20. Growth was driven by the non-oil sector, which expanded to 6.7 per cent from 0.8 per cent y-o-y in 1Q21.

Remarkably, the trade, information and communication, transportation, electricity, agriculture and manufacturing sectors contributed the most to GDP growth. On a quarterly basis, the GDP decreased by 0.8 per cent.

For the time being, the re-imposition of lockdown measures to cope with a new wave of COVID-19 has become a more pressing risk.

In the short term, the economy is anticipated to pursue its recovery, though high inflationary pressures, liquidity constraints and the impact of and uncertainties related to COVID-19 will provide challenges.

Justin Nwosu

Justin Nwosu is the founder and publisher of Flavision. His core interest is in writing unbiased news about Nigeria in particular and Africa in general. He’s a strong adherent of investigative journalism, with a bent on exposing corruption, abuse of power and societal ills.