With oil pricing rising above $70 per barrel band, OPEC Secretary-General, Dr Sanusi Barkindo, has warned members against complacency.
He said latest projections showed Gross Domestic Product (GDP) growth of 5.5 per cent in 2021, up from 5.4 per cent at the last meeting.
He stated that the projections for oil are largely unchanged from last month, as demand is expected to grow by 6 mb/d to around 96.5 mb/d on average for the year, an increase of 6.6 per cent.
Barkindo stated that the market outlook for later this year looks especially promising, while anticipating that demand will surpass 99 mb/d in the fourth quarter, which would put OPEC back in the range of pre-pandemic levels.
Barkindo, who warned against complacency, stated that non-OPEC liquids production is now forecast to grow at a slightly slower pace than expected last month, rising by around 700,000 b/d in 2021 to an average of 63.6 mb/d.
According to him, the actions of the Declaration of Cooperation (DOC) have continued to support the rebalancing process, and have helped reduce the global supply by more than 2.9 billion barrels since May 2020.
He said, “There continues to be significant overproduction by some of the participating countries. The overproduced volumes need to be accommodated to achieve the goals we have set for ourselves.
“In this regard, the 15th OPEC and non-OPEC ministerial meeting agreed to extend the very generous compensation period for overproduced volumes until the end of September 2021.
“Our continued contributions to sustainable oil market stability depend upon all participants achieving 100 per cent conformity and, where necessary, working dutifully to compensate for overproduction.”
Brent crude, Nigeria’s oil benchmark, crossed the much-awaited $70 mark, hitting $71.33 at a point. West Texas Intermediate (WTI) rose as much as 3.8 per cent to $68.87 a barrel, a level it has failed to hold for a sustained period since 2018.
However, the climbing oil price could worsen Nigeria’s fiscal crisis as it portends the federal government spending more to keep the pump price of petrol stable at the current N162-N165 price band in view of the non-conclusion of talks with labour and other stakeholders on the need to float petrol cost in conformity with the policy on the deregulation of the downstream sector.
The new price levels were driven by expectations of growing fuel demand during the summer driving season in the United States as OPEC+ agreed to boost output and strong usage indications coming from China.
OPEC+ also collectively agreed to continue a slow easing of supply curbs at its virtual meeting yesterday, coordinated from Vienna, as producers balanced an expected demand recovery against a possible increase in Iranian output.
The cartel, according to information garnered from the meeting, pegged Nigeria’s July’s reference production at 1.829million bpd, the country’s adjustment was put at 250,000 bpd, while required output for the month is expected to be 1.579 million bpd.
OPEC+ decided in April to return 2.1 million barrels per day (bpd) of supply to the market from May to July, anticipating rising global demand despite the high number of coronavirus cases in India, the world’s third-largest oil consumer.