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OPEC Bids Member-states to Increase Supply by July, Nigeria Others Benefit

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OPEC - Investors King

The Organisation of Petroleum Exporting Countries (OPEC) has increased the oil supply by petroleum exporting countries by 0.648 million per day in July, owing to the increase in the global refinery intake. 

On Thursday, OPEC released an official statement after its 29th Ministerial Meeting that it has decided to adjust the monthly production plan of its member states by increasing the overall production beginning next month, July. 

According to the statement made available to Investors King, the global petroleum regulator stated that it has advanced the overall production for July and will be adjusted by an increment of 0.648 million per barrel. 

OPEC further stated that the organisation will extend its compensation period until the end of December 2022, as requested by some underperforming countries. 

It added that peradventure, the underperforming countries submit their plans by 17 June 2022. “Compensation plans should be submitted following the statement of the 15th OPEC and non-OPEC Ministerial Meeting,” it said. 

Nigeria, the largest exporter of crude oil in Africa, benefited from this increase from 1.772mpd for June 2022 to 1.799mpd by July. This upward means that Nigeria’s production and supply of crude oil has moved up by 27 000barrels – a 3.5 percent increase. 

Other African countries that have benefited from the increase are Algeria’s 1,039mpb, and Angola’s 1,502mpb, among other countries. 

The 30th edition of the OPEC and the non-OPEC Ministerial Meeting is scheduled for June 30, 2022. 

Presently, according to the data obtained from the Nigerian National Petroleum Corporation (NNPC), the four refineries (Port-Harcourt Refining Company (2), Kaduna Refining & Petrochemical Company Limited, and the Warri Refining & Petrochemical Company Limited) in Nigeria “have a combined installed capacity of 445,000bpd.”

A comprehensive network of pipelines and depots strategically located throughout Nigeria links these refineries. 

 

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Crude Oil

Crude Oil Dips Slightly on Friday Amid Demand Concerns

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On Friday, global crude oil prices experienced a slight dip, primarily attributed to mounting concerns surrounding demand despite signs of a tightening market.

Brent crude prices edged lower, nearing $83 per barrel, following a recent uptick of 1.6% over two consecutive sessions.

Similarly, West Texas Intermediate (WTI) crude hovered around $78 per barrel. Despite the dip, market indicators suggest a relatively robust market, with US crude inventories expanding less than anticipated in the previous week.

The oil market finds itself amidst a complex dynamic, balancing optimistic signals such as reduced OPEC+ output and heightened tensions in the Middle East against persistent worries about Chinese demand, particularly as the nation grapples with economic challenges.

This delicate equilibrium has led oil futures to mirror the oscillations of broader stock markets, underscoring the interconnectedness of global economic factors.

Analysts, including Michael Tran from RBC Capital Markets LLC, highlight the recurring theme of robust oil demand juxtaposed with concerning Chinese macroeconomic data, contributing to market volatility.

Also, recent attacks on commercial shipping in the Red Sea by Houthi militants have added a risk premium to oil futures, reflecting geopolitical uncertainties beyond immediate demand-supply dynamics.

While US crude inventories saw a slight rise, they remain below seasonal averages, indicating some resilience in the market despite prevailing uncertainties.

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Nigeria’s Oil Rig Count Soars From 11 to 30, Says NUPRC CEO

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The Chief Executive Officer of the Nigerian Upstream Petroleum Regulatory Commission (NUPRC), Gbenga Komolafe, has announced a surge in the country’s oil rig count.

Komolafe disclosed that Nigeria’s oil rigs have escalated from 11 to 30, a substantial increase since 2011.

Attributing this surge to concerted efforts by NUPRC and other governmental stakeholders, Komolafe highlighted the importance of instilling confidence, certainty, and predictability in the oil and gas industry.

He explained the pivotal role of the recently implemented Petroleum Industry Act (PIA), which has spurred significant capital expenditure amounting to billions of dollars over the past two and a half years.

Speaking in Lagos after receiving The Sun Award, Komolafe underscored the effective discharge of NUPRC’s statutory mandate, which has contributed to the success stories witnessed in the sector.

The surge in Nigeria’s oil rig count signifies a tangible measure of vibrant activities within the upstream oil and gas sector, reflecting increased drilling activity and heightened industry dynamism.

Also, Komolafe noted that NUPRC has issued over 17 regulations aimed at enhancing certainty and predictability in industry operations, aligning with the objectives outlined in the PIA.

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Oil Prices Rebound in Asian Markets Amid Red Sea Shipping Concerns

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Amid escalating attacks on shipping in the Red Sea and growing uncertainty regarding U.S. interest rate cuts, oil prices rebounded in Asian markets today.

Brent crude oil, against which Nigerian oil is priced, climbed by 24 cents to $82.58 a barrel while the U.S. West Texas Intermediate crude oil (WTI) rose by 21 cents to $77.25.

The rebound comes after both Brent and WTI contracts experienced a 1.5% and 1.4% decline, respectively, from their near three-week highs on Tuesday.

This decline occurred as the premium for prompt U.S. crude futures to the second-month contract widened to $1.71 a barrel, its widest level in approximately four months.

However, on Wednesday, the premiums slid to 4 cents a barrel.

Analysts suggest that oil futures have entered a relatively range-bound phase, with current prices reflecting a risk premium of $6-7 per barrel.

The situation could persist until the next significant development in the Gaza crisis, whether it involves a de-escalation through a ceasefire or a further intensification of the conflict.

Recent attacks on vessels in the Red Sea and Bab al-Mandab strait by Yemen’s Iran-aligned Houthis have heightened concerns over freight flows through these critical waterways.

Moreover, Washington’s veto of a draft UN Security Council resolution on the Israel-Hamas war has added to geopolitical tensions impacting oil markets.

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