There are projections that the global oil supply may remain sluggish till 2025 following the extension of Organisation of Petroleum Exporting Countries (OPEC) plus voluntary output cut.
OPEC had earlier this month decided to retain oil production cuts to tighten the market. This is against expectations of relaxing their grip of the oil market, the producers rather extended their agreement to 2025.
Rystad Energy on Monday, while assessing the development as well as demand forecast, projected that the total global oil supply growth would be near zero in 2024.
The projection noted that the current year could go down as the first since 2020 with zero supply growth. Against earlier supply growth of an additional 900,000, Rystad expects supply growth at 80,000 barrels per day for 2024.
Going by OPEC+ cuts, the cartel would remove 830,000 barrels per barrel of crude from the market while 1.04 million bpd would go off the market next year.
Vice President of Rystad, Patricio Valdivieso, said the market initially responded negatively to the latest OPEC+ guidance, adding however that it’s difficult to remain completely bearish when global oil supply growth is expected to slow down in 2024 and reduced production is still a possibility in 2025,” Reuters quoted.
While OPEC is looking at oil prices in a range of $80-$100/bbl, which becomes challenging if U.S. production continues to grow, the implications for the country could mean more money would be spent on importing petroleum products.
With reliance on importation, a high oil price creates a difficult situation for countries like Nigeria. Although Nigeria should be smiling to the bank with high oil prices, the importation of petroleum products amidst high exchange rate, inflation and subsidies creates economic inability during a high oil price.
