Nigeria Maintains Position as Africa’s Topmost Oil Producer, but Falls Short of OPEC Quota in February

The Organisation of Petroleum Exporting Countries (OPEC) recently released its Monthly Oil Market Report, confirming that Nigeria produced 1.3 million barrels per day (bpd) of crude oil in February, in line with the country’s self-reported data. This cements Nigeria’s position as Africa’s topmost producer, outperforming Algeria and Angola.

However, despite Nigeria’s performance, it underperformed by as much as 500,000 bpd, given its OPEC quota of 1.8 million bpd for the month under consideration. This raises concerns about the country’s ability to meet its targets and contribute to the OPEC+ agreement.

OPEC’s report also projected that world oil demand in 2023 will rise by 2.32 million bpd, or 2.3%, unchanged from last month’s forecast. Investors King understands that while better-than-expected Chinese growth could enhance the oil market this year, crude prices fell this week as the collapse of Silicon Valley Bank sparked fears of a fresh financial crisis.

China, the largest importer of crude oil,  is expected to help oil demand grow by 710,000 bpd in 2023, up from last month’s forecast of 590,000 bpd and a contraction in 2022, according to OPEC.

Despite output cuts by the wider OPEC+ group, OPEC’s oil production rose in February as its crude oil output increased by 117,000 bpd to 28.92 million bpd, largely bolstered by the recovery recorded in Nigeria. However, Nigeria, Angola, and other members are still struggling to attain their targets, resulting in OPEC’s total output hovering below its OPEC+ agreement level.

OPEC’s report also warned that the rising trend in inflation, ongoing external and fiscal pressures, and deteriorating global macroeconomic conditions are expected to lead to slowing economic activity in Nigeria in 2023.

Meanwhile, Moody’s Investors Service has placed six US banks on review for potential credit rating downgrades in the wake of last week’s collapse of Silicon Valley Bank.

This event impacted the price of Nigeria’s oil benchmark, Brent, which fell nearly 2% in volatile trading on Monday and raised fears of a fresh financial crisis.