Nigeria’s daily oil output shortfall of 80,000 barrels was the biggest among the Organisation of Petroleum Exporting Countries (OPEC) for December 2019 according to ship-tracking data and loading schedules.
The bulk of the shortage stemmed from reduced shipments of Bonga crude, which according to traders had been undergoing maintenance.
Given OPEC estimates, Nigeria’s oil production for November plunged to 1.79 million barrels per day (bpd) compared to the 1.80 million bpd posted in October.
A survey by Reuters said OPEC’s oil output plunged in December as Nigeria and Iraq complied further to pledged cuts and Saudi Arabia, the group biggest producer, made more reductions in view of a new production-limiting agreement.
OPEC pumped a daily average of 29.50 million barrels last month according to Reuters, a 50,000 bpd shortfall when set beside the figure posted in November.
Stephen Brennock of oil broker PVM observed that “Looking ahead, geopolitical risks will remain front and centre of investor concerns.”
“A tense waiting game has begun to see if the fallout will lead to a disruption in regional oil supplies.”
A group known as OPEC+, comprising OPEC, Russia and other allies, agreed to cut supply by 1.2 million bpd in 2019. OPEC had roughly 800,000 bpd share of the cut to be made by 11 of its members excluding, Libya, Venezuela and Iran.
OPEC+ resolved, at subsequent meetings in December, to make a further cut of half a million bpd as of 1st January 2020.
In the spirit of the agreement, the 11 OPEC members easily exceeded the reduction target thanks in large part to the efforts Saudi Arabia and its Gulf Allies.
The December survey indicates that Nigeria and Iraq made notable progress even though both nations had struggled to make the required cuts in most parts of 2019. Compliance level leapt to 158% in December from 153% according to the survey.
Saudi Arabia and Iraq, OPEC’s biggest oil producing nations, each reduced 50,000 bpd for the month. This implies that Saudi’s production for 2019 was more than 500,000 bpd below its initial target.
Iraq’s 59% compliance level is well below Saudi’s but increased by 23% over November’s figure.
Angola posted the largest increase among countries pumping more oil, a development that buoyed exports after maintenance affecting the Girassol crude stream had curbed supplies.
Meanwhile, crude oil prices rose early Thursday, recouping some of the heavy losses from the previous session, triggered by ease in the US-Iran conflict.
Brent crude, the global oil benchmark, leapt by 55 cents or 0.8% to $65.99 a barrel as of 02:09 West African Time (WAT) after plunging by 4.1% on Wednesday.
West Texas Intermediate (WTI) added 61 cents or 1 per cent to $60.22 after falling by roughly 5% the day before.
Oil prices also came under pressure Wednesday following a surprise build in US stockpiles.
JP Morgan forecast Brent to average $64.50 a barrel this year.
“The impact on oil prices will depend on (the) extent of supply disruption versus available spare capacity, global oil inventories and reaction to oil price from US producers,” the bank said in a commodities research note.
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