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Nigeria Commodities December 2023

Nigeria: Nigerian oil output hits 32-month high in December

Brent crude oil prices averaged USD 77.54 per barrel in December, down 5.7% from November’s price. On 29 December, the commodity traded at USD 77.69 per barrel, 3.7% lower than on the same day of the previous month. Prices have remained muted in January, dented by soft global demand and strong non-OPEC+ supply.

Turning to production, Nigerian oil output rose to 1.42 million barrels per day (mbpd) in December from November’s 1.32 mbpd. The reading marked the highest level of production since April 2021.

In other news, in late December, the country reaffirmed its commitment to OPEC, right after Angola exited the organization. Meanwhile, in early January, the Dangote refinery started producing diesel and aviation fuel. Lastly, in mid-January, British energy company Shell reached an agreement with the consortium Renaissance Africa Energy to sell its on-shore oil business in the country for up to USD 2.4 billion. That said, Shell will retain its operations in offshore oil and gas fields.

Oil production is seen increasing for the second consecutive year in 2024 thanks to increased security in the Niger Delta. Rising output in the recently-opened Dangote refinery is likely to provide a further boost; the refinery is expected to turn Nigeria into a net exporter of fuels ahead after years of being almost completely reliant on imports. Nonetheless, our panelists project oil output to average below the 1.50 mbpd OPEC+ target. Renewed turmoil in the Niger Delta is the key downside risk to the outlook.

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