The rise in global oil prices could brighten Nigeria’s outlook this year, the Organisation of the Petroleum Exporting Countries said in a new report.
The international oil benchmark, Brent crude, reached the $60 per barrel mark for the first time in over 12 months.
It traded around $61.28 per barrel as of 3:54pm Nigerian time on Friday, more than $20 higher than the Federal Government’s benchmark for the 2021 budget.
The 2021 budget, which was signed by the President, Major General Muhammadu Buhari (retd.), on December 31, was based on an oil price benchmark of $40 per barrel and a production level of 1.86 million barrels per day.
OPEC’s monthly oil market report for February showed that Nigeria’s crude oil production rose 208,000 barrels to 1.38 million barrels per day in January from 1.17 million bpd in December, based on direct communication.
The group uses secondary sources to monitor its oil output, but also publishes a table of figures submitted by its member countries.
According to secondary sources, Nigerian crude production fell slightly to 1.34 million bpd in January from 1.37 million bpd in December.
OPEC’s total crude oil production averaged 25.50 million bpd in January 2021, up by 0.18 million bpd month-on-month.
It said, “The meaningful rise in oil prices following the recent DoC (Declaration of Cooperation) decisions, along with a positive trajectory from COVID-19 vaccines, could brighten the 2021 outlook and lay the groundwork for a hopeful medium-term real GDP expansion.
“Moreover recent data showed that consumer confidence in Nigeria increased to -14.80 points in 4Q20 from -21.20 points in 3Q20.”
The group, however, noted that the recent Central Bank of Nigeria composite Purchasing Managers’ Index for the manufacturing sector edged down to 49.6 in December from 50.2 in November, signalling a renewed contraction in the country’s manufacturing activity.
Demand for OPEC crude in 2020 was revised up by 300,000 bpd from the previous report to stand at 22.5 million bpd, around 7.1 million bpd lower than in 2019.
Demand for OPEC crude in 2021 was also revised up by 300,000 bpd from the previous month to stand at 27.5 million bpd, around five million bpd higher than in the previous year.
The report said, “The historical drop in global oil demand of 9.7 million bpd y-o-y in 2020, as a result of the COVID-19 pandemic, prompted a shock to the established relationship between oil demand and global economic growth.
“While demand for all petroleum products declined sharply in 2020, the transportation sector, and aviation in particular, which amounts to around 50 per cent of total oil demand, was disproportionately affected.”
Global oil demand is forecast to grow by around 5.8 million bpd this year, recovering some of the losses seen in 2020.