Boost for Nigeria as crude oil prices soar, FG discloses amount saved from aubsidy removal

Following rumoured oil production cuts by the Organisation of Petroleum Exporting Countries (OPEC), the price of Brent crude rose to $81.8 per barrel, a 0.7% rise increase.

The US West Texas Intermediate crude rose to about $76.40 per barrel.

OPEC members to plan new production policy

The development follows a four-week price drop driven by reduced concerns over the crisis in the Middle East and fears of possible supply disruptions.

Crude oil prices surged amid mounting expectations that OPEC and its allies will drive voluntary production cuts.

The two crude grades increased in price on Monday, November 20, 2023, with Brent crude rising above $81 per barrel.

According to a Reuters report, OPEC members are convening on Sunday, November 26, 2023, to plan a new production policy.

The report said that Goldman Sachs analyses reveal OPEC decisions suggest that more cuts are possible given the drop in speculative positioning and time spreads.

Earlier projections of a tight oil balance for the rest of the year have eased. Per the reports, if OPEC+ members join the planned production cuts, the projected surplus for Q1 2024 could diminish.

Nigeria experiences increased crude oil production

The move comes amid reports of increased production in Nigeria for October 2023.

The Nigerian Upstream Petroleum Regulatory Commission (NUPRC) revealed that the country produced about 1.305 million barrels for October 2023, which OPEC said made Nigeria Africa’s largest oil producer.

NUPRC disclosed this in its latest crude oil and condensate production data.

The figure represents the highest level since this year and the most significant volume since January 2022.

The Commission said output increased by 4.011 barrels per day in July compared to 1.346 562 barrels per day in September 2023.

Despite improved production in October, the volume is still below Nigeria’s OPEC quota of 1.74 million barrels per day.

Analysts predict better days for the naira

Energy experts believe that the increased production will enhance the performance of the naira in the Forex market.

Tony Ijeh, an industry analyst, says that following the reduction in hostility in oil-producing communities in Nigeria, the country could expect enhanced output. “Remember, we are still dealing with a massive crude oil theft, but that is nothing compared to militancy and hostilities experienced in those communities in the past,” Ijeh said.

“Nigeria needs to ramp up production quickly, repair damaged pipelines, and improve surveillance to reap the full benefits of this sudden price surge.”

“The development means a big boost for the external reserves and the naira,” Ijeh said. R

On Monday, November 20, 2023, the Minister of Finance, Wale Edun, disclosed that Nigeria had saved about N1 trillion from removing subsidies from petrol.