Nigeria’s crude oil output reduces by 40,000bpd

NIGERIA’S crude oil production fell by 40,000 barrels per day (bpd) in July relative to the previous month, reflecting a generally sluggish business activity in Africa’s largest economy.

The Organisation of the Petroleum Exporting Countries (OPEC) stated this in its Monthly Oil Market Report (MOMR) released on Friday, August 10.

The report showed that Nigeria’s crude oil output slid to 1.295 million bpd in July from 1.255 mbpd in June.

It stated that the total crude oil output produced by OPEC’s 13 member countries dropped by 836,000 bpd to an average of 27.31 mbpd in July, due mainly to a decline in production in Nigeria, Saudi Arabia, and Libya.

The OPEC members had in June this year agreed to cut production volumes to ensure global oil market stability.

For a long while, Nigeria hardly fulfilled the 1.8 mbps OPEC quota as it battles operational and security issues. In February, it only reached 1.38 mbpd, The ICIR reported, representing the highest production output since the beginning of the year.

From August to November this year, the country expects production output of 1.826 mbpd, 1.830 mbpd, 1.826 mbpd and 1.747 mbpd, respectively, while from January to December 2024, it is expected to reduce its production quota to 1.380 mbpd

The OPEC report noted that Nigeria’s economy, which grew by 3.3 per cent in 2022, is forecast to decelerate in 2023.

Growth in the first quarter stood at 2.4 per cent, following growth of 3.6 per cent in the fourth quarter of 2022, an indicator of this year’s anticipated slowdown.

High inflation continues to burden the economy.

Inflation data for June showed an ongoing acceleration, with an annual rate of 22.8 per cent, following 22.4 per cent in May and 22.2 per cent in April and 22 per cent in March.

Food inflation has been a critical factor in this rise, reaching 25.1 per cent in June after 24.8 per cent in May.

In the meantime, President Bola Tinubu has declared a state of emergency in response to the pressing issue of food insecurity.

“A combination of factors, including conflict, the impact of climate change, population pressures, and the below-average output of the agricultural sector, has exacerbated the scarcity of food resources over recent years,” OPEC highlighted.

On the fiscal side, the Federal government has unveiled a financial package amounting to N500 billion, while on the monetary side, the Central Bank of Nigeria lifted the key policy rate by 25 basis points to 18.75 per cent in July to lower inflation pressure.

As a consequence of the ongoing challenges, business activity retracted to stand at 51.7 in July after it reached a level of 53.2 in June, according to Stanbic IBTC Purchasing Managers’ Index (PMI) released in August.

It showed that business activity shrunk in July on rising input costs, although still above the contractionary threshold.

    A PMI reading above 50 indicates that business activity is expanding, while below 50 indicates contracting.

    It measures the performance of the private sector from agriculture, manufacturing, services, construction and retail.

    Fuel subsidy removal and exchange rate unification are pressuring business activity, raising input costs, and weakening the naira.

    The combination of rising petrol prices and increased electricity costs would exacerbate the difficulties businesses face and limit the manufacturing sector’s profitability, according to the director general of the Manufacturers Association of Nigeria (MAN), Segun Ajayi-Kadir.

    Join the ICIR WhatsApp channel for in-depth reports on the economy, politics and governance, and investigative reports.

    Support the ICIR

    We invite you to support us to continue the work we do.

    Your support will strengthen journalism in Nigeria and help sustain our democracy.

    If you or someone you know has a lead, tip or personal experience about this report, our WhatsApp line is open and confidential for a conversation


    Please enter your comment!
    Please enter your name here

    Support the ICIR

    We need your support to produce excellent journalism at all times.

    - Advertisement