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Business News of Wednesday, 18 January 2023


OPEC’s market outlook unchanged as Nigeria boosts output

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The Organisation of the Petroleum Exporting Countries (OPEC), yesterday, left its key forecasts for 2023 oil supply and demand unchanged for the second month running, even as it increased output, according to its latest monthly production data.

The cartel also flagged up uncertainties around global economic growth and the outlook for Russian oil production. The forecast for global oil demand growth has been left unchanged at 2.22mn b/d for this year. While the group’s latest Monthly Oil Market Report (MOMR) notes a “better performance in China’s economy on the back of its reopening from Covid-19 restrictions”, it nudged down its Chinese oil demand growth forecast by 20,000 b/d from the previous report to 510,000 b/d.

OPEC sees global oil demand hitting 101.8mn b/d in 2023, up from 99.55mn b/d in 2022. But the forecast is “subject to many uncertainties, including global economic developments, shifts in Covid-19 policies and ongoing geopolitical tensions,” the MOMR said.

In terms of production, OPEC-13’s average December production rose by 91,000 barrels per day, according to the MOMR to 28.971 million bpd, with nearly all of the gains coming from Nigeria.

Nigeria’s crude oil production rose by 91,000 bpd in December to 1.267 million bpd, with production also rising in Angola (+42,000 bpd), Iran (+9,000 bpd), Libya (+17,000 bpd), Saudi Arabia (+4,000 bpd), and Venezuela (+13,000 bpd).

Venezuela’s production increase comes as Chevron was granted an expansion of its license to export crude oil to the United States for use in its or other refineries.

Kuwait’s crude oil production fell sharply, by 35,000 bpd. Other losses were seen in Algeria (-11,000 bpd), Congo (-18,000 bpd), Equatorial Guinea (-1,000 bpd), Gabon (-6,000 bpd), Iraq (-4,000 bpd), and the UAE (-9,000 bpd).

While Saudi Arabia’s production based on secondary sources increased in December 2022 at 10.478 million bpd, direct reported figures by Saudi Arabia show a production loss of 32,000 bpd, to 10.435 million bpd.

Nigeria’s directly reported production gains were more modest than secondary source reporting, at just 50,000 bpd, to 1.235 million bpd. According to the MOMR, OPEC’s share of global crude oil production “remained unchanged at 28.5 per cent in December, compared with the previous month.”

OPEC also left its oil supply projections for 2023 unchanged. It estimates non-OPEC supply will grow by 1.5mn b/d to hit 67.2mn b/d, with most of the increase coming from the US, Norway, Canada, Kazakhstan and Guyana.

It sees Russian oil supplies, which are under strain due to western oil embargoes and the G7-led oil price cap, dropping by 850,000 b/d this year. This would leave Russian liquids output at 10.18mn b/d, down from 11.03mn b/d in 2022, although it noted that the “forecast remains subject to high uncertainty”.

The wider OPEC+ group is not scheduled to hold a ministerial meeting to discuss output policy until 4 June, but the group’s Joint Ministerial Monitoring Committee meets on 1 February where it will assess market fundamentals.