OPEC’s Secondary Data Shows Nigeria’s Oil Production Rose 2.29m Barrels in May

•IEA projects structural decline in developing oil-producing nations’ output

Emmanuel Addeh in Abuja

Secondary data newly released by the Organisation of Petroleum Exporting Countries (OPEC) has indicated that Nigeria’s crude oil production in May rose by 74,000 barrels per day, translating to 2.29 million barrels for the entire month.

However, considering Nigeria’s direct communication, it stated that the average daily crude oil production dropped to 1.25 million bpd in May, according to its Monthly Oil Market Report (MOMR).

While the international oil production group collates information from energy intelligence platforms as well as oil research firms that track ship movements (secondary), member countries can also self-report their output (direct communication).

According to the organisation, the country drilled 1.419 million bpd during the month under review as distinct from 1.34 million bpd the previous month. But primary communication, it said, indicated that the month’s output declined by 2.34 per cent from the 1.28 million bpd recorded in April.

“According to secondary sources, total OPEC-12 crude oil production averaged 26.63 million bpd in May 2024, 29,000 bpd higher, m-o-m. Crude oil output increased mainly in Nigeria, Gabon and Equatorial Guinea, while production in Saudi Arabia, Kuwait, Libya and Congo decreased,” it stated.

At the same time, it stressed that total non-OPEC crude oil production averaged 14.29 million bpd in May 2024, 152,000 bpd lower, month-on-month, with crude oil output increasing mainly in Mexico, while production in Russia and Kazakhstan decreased.

Although Nigeria has said it has the potential to produce over 2 million bpd of oil per day, however its efforts have been hobbled by oil theft, pipeline vandalism as well as prolonged years of lack of investment in the upstream sector.

Also yesterday, the International Energy Agency (IEA) said that the world was facing a major oil capacity glut in the current decade that could trigger lower prices and test OPEC’s market control as global oil demand peaks.

Global oil demand, including biofuels, it said, will likely level off near 106 million bpd toward the end of this decade, up from just over 102 million bpd in 2023, due to the boom in electric vehicles, renewable energy and fuel efficiencies, the IEA said in its latest annual mid-term outlook, “Oil 2024.”

Total oil demand is still forecast to rise by 3.2 million bpd between 2023 and 2030, supported by increased use of jet fuel and feedstock from the petrochemical sector.

As in recent years, oil demand growth will be underpinned by Asia’s biggest economies, with growth in China driven by the petrochemical sector, while in India, transport fuels will see significant gains, the IEA said.

By contrast, oil demand in developed economies is expected to continue a structural decline, falling from around 46 million bpd in 2023 to less than 43 million bpd by 2030, the lowest since 1991.

A year ago, the IEA had predicted that global oil demand would peak by the end of the decade after rising 6 per cent to 105.7 million bpd through the 2022-2028 period.

S&P Global Commodity Insights forecast that global oil demand, including biofuels, peaking at around 109 million bpd in 2034, with a gradual decline in the following years and only falling below 100 million bpd in 2050. Commodity Insights forecasts demand averaging 104.8 million bpd in 2024.

Separately, the IEA cut its 2024 global oil demand growth forecast for a third consecutive month, trimming 100,000 bpd from the estimate, S&P Global said.

Helped by an upward revision to its 2023 demand estimates, the IEA now sees world oil demand growing by just 960,000 bpd this year to average 103.2 million bpd.

“Oil’s subdued outlook is expected to carry forward into 2025, with a modest increase of 1 million bpd reflecting lacklustre economic growth, an expanding EV fleet and vehicle efficiency gains,” the IEA said in its latest monthly oil market report.

The IEA’s latest revision to its 2024 demand forecast puts it at increasing odds with the much more bullish outlook of OPEC producers. OPEC on June 11 reiterated its forecasts for global oil demand growth of 2.25 million bpd for 2024 and 1.85 million bpd for 2025.

With oil demand peaking in the coming years, the IEA predicted that surplus global supply capacity could reach “unprecedented levels” by 2030, potentially disrupting the current OPEC+ strategy aimed at price stabilisation.

At 0845 GMT, Brent crude futures were trading around $82.31/barrel, about $10/barrel below early April’s 2024 highs. Commodity Insights currently expects its assessed Dated Brent crude benchmark to average $81/barrels in 2025, down from $88.4/barrels in 2024.

“This report’s projections, based on the latest data, show a major supply surplus emerging this decade, suggesting that oil companies may want to make sure their business strategies and plans are prepared for the changes taking place,” IEA Executive Director, Fatih Birol, said in a statement.