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Nigeria Commodities May 2024

Nigeria: Nigerian oil output rise in May

Brent crude oil prices averaged USD 83.05 per barrel in May, down 6.7% from April. On 31 May, the commodity traded at USD 81.80 per barrel, down 7.0% from 30 April. Easing tensions between Iran and Israel pushed down prices.

Turning to production, Nigerian oil output rose to 1.42 million barrels per day (mbpd) in May from 1.35 mbpd in April, remaining below the 10-year average of 1.60 mbpd but coming in above 2023’s average level of 1.31 mbpd.

In other news, in early June, Nigeria’s state energy firm NNPC reached an agreement with Golar LNG to deploy a floating liquified natural gas vessel off the coast of the Niger Delta; production is expected to start in 2027.

Oil output this year is forecast to remain around last year’s levels, below both the 10-year average of 1.60 mbpd and the 1.50 mbdp OPEC+ target. That said, an improved security situation in the Niger Delta should provide support. In addition, rising production in the Dangote refinery should boost the petroleum sector; after years of being almost entirely reliant on imports, the refinery should turn Nigeria into a net exporter of fuels ahead. Renewed disruptions in the Niger Delta pose a key downside risk.

Analysts at the EIU commented:

“We expect the larger offshore oil sector to remain attractive, driving incremental increases in output, but production will stay below OPEC+ quotas and pre-pandemic levels.”

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