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Nigeria’s Faltering Output Lowers Overall OPEC Output In January

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The Organization of Petroleum Exporting Countries, OPEC, showed a decrease in oil production in January as Nigerian output fail to recover. A Reuters survey also revealed that exports from Iraq decreased, but Gulf nations continued to adhere strictly to the OPEC+ agreement on reducing production to sustain the market.

According to the survey, OPEC produced 28.87 million barrels per day (bpd), a decrease of 50,000 bpd compared to December. In September, OPEC’s output reached its highest level since 2020. Throughout 2022, production by OPEC and its allies, including Russia (known as OPEC+), increased as demand improved. However, in November, when oil prices weakened, OPEC+ made the largest reduction in production targets since the early stages of the COVID-19 pandemic in 2020.

The November decision by OPEC+ called for a reduction of 2 million bpd in the output target, with 1.27 million bpd to be contributed by the 10 OPEC member countries involved. This target remains in place. The survey found that compliance with the agreement increased to 172% of the pledged cuts in January, compared to 161% in December, due to the decrease in output this month.

The target production levels are not being met due to the inability of many producers, such as Nigeria and Angola, to pump at the agreed levels. The survey revealed that the 10 OPEC members obligated to cut production pumped 920,000 bpd below the group’s target for January, compared to a shortfall of 780,000 bpd in December.

According to Eikon data and two companies tracking oil flows, Iraq, the second-largest producer in OPEC, exported fewer barrels this month from its southern fields. The survey showed that Nigerian output remained steady in January, following a rebound in December, indicating there is still work to be done if the country is to reach its goal of increasing output to 1.6 million bpd this quarter.

According to the survey, OPEC’s Gulf producers generally adhered to their targets under the OPEC+ agreement. Some sources in the survey believed that Saudi Arabia reduced its exports, while output in the United Arab Emirates increased by about 10,000 bpd. Among the three OPEC producers exempt from cuts – Libya, Iran, and Venezuela – Venezuela’s output was slightly higher and there was a small decrease in Iran, which experienced a spike in exports in December.

The Reuters survey aims to monitor oil supply in the market and is conducted using shipping data from external sources, Refinitiv Eikon flow data, information from flow tracking companies such as Petro-Logistics and Kpler, and input from oil companies, OPEC, and consultants Nigeria’s inability to meet up with its OPEC target has been adduced to several factors ranging from crude oil theft to pipeline vandalism. This has negatively impacted the country’s economy. It is unclear the effect of this low output on the prices of AGO and MGO

Source:  Oriental News, Leadership NG

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