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Nigeria Could See an Increase in Oil Revenues from Higher Oil Prices In 2023

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In 2023, Nigeria appears to be poised to increase its revenue from oil, thanks to favorable conditions in the global oil market. However, last year when oil prices rose in the aftermath of Russia’s invasion of Ukraine, Nigeria failed to capitalize on the opportunity, in contrast to other oil-producing countries such as Saudi Arabia, as well as international oil corporations such as Shell, Chevron, Equinor, and ExxonMobil. The reason for this was primarily due to crude oil theft, which caused Nigeria’s crude production to fall below the quota set by the Organization of Petroleum Exporting Countries (OPEC) of 1.8 million barrels per day, reaching a low of under 1 million barrels per day.  

The following factors on the international scene could see Nigeria increasing its crude oil revenues:
According to the February 2023 market report from the International Energy Agency, there will be an increase in global oil demand in 2023. The report notes that demand growth in China and an increase in air travel will contribute to a record demand of 101.9 million barrels per day, which is 14 million barrels per day more than the average demand in 2019.
Also, it should be recalled that OPEC made a decision on February 1, 2023 to maintain its current oil production policy without making any adjustments. In 2022, the organization had agreed to reduce its oil production target by 2 million barrels per day until the end of 2023.
Despite Russia’s announcement that it plans to reduce its oil production by 500,000 barrels per day, the decision by OPEC to maintain its production policy remains unchanged. Russia’s decision is in response to the Group of Seven countries, the European Union, and Australia implementing a price cap on seaboard cargoes of Russian oil, which has been set at $60 a barrel.
If Nigeria can take advantage of the opportunities that the world oil market has created, it would go a long way in boosting its economy and reasserting its position as the giant of Africa. Doing this requires that internal conflicts which have impeded Nigeria’s oil production output be addressed.

Source:  Nairametrics, The Punch

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