WEAK DEMAND IN GLOBAL CRUDE PRICE TO CAUSE SLOW GROWTH IN NIGERIA’S ECONOMY

Top oil producers in Africa are likely to experience weak growth in 2021. This comes as a result of recent updates from the Organization of the Petroleum Exporting Countries (OPEC), that the global oil demand will rebound more slowly in 2021 than previously thought because of rising coronavirus cases in Europe and North America. The organization also revealed that the pandemic is hampering its efforts and those of its allies to support the market. 

According to OPEC, demand will rise by 6.25 million barrels per day (bpd) in 2021 to 96.26 million bpd. The growth forecast is 300,000 bpd less than expected in October 2020. “The oil demand recovery will be severely hampered and sluggishness in transportation and industrial fuel demand is now assumed to last until mid-2021,” said OPEC.

Nigeria produces about 2 million barrels of crude daily and earned about $54 billion from crude oil and gas exports in 2019. According to a report, the country holds 37,070,000,000 barrels of proven oil reserves as of 2016, ranking 10th in the world and accounting for about 2.2 percent of the world’s total oil reserves of 1,650,585,140,000 barrels.

The West African country has proven reserves equivalent to 237.3 times its annual consumption. This means that, without Net Exports, there would be about 237 years of oil left (at current consumption levels and excluding unproven reserves.)

Additionally, efforts by the European government to shut restaurants and encourage working from home will likely affect fuel demand for the rest of 2020. This is coupled with the pandemic’s impact on the oil market lingering until the middle of next year.

All of these factors further affect the price and production of crude globally, with African producers negatively impacted as a result of their heavy dependence on the oil market.

Source : Ventures Africa