By Adedapo Adesanya
Nigeria continues to face supply disruptions, limiting the ability of the country to reach its production target which is contributing to an imbalance between oil supply and demand, according to the International Energy Agency (IEA).
Speaking at a recent media chat, the agency’s chief, Mr Fatih Birol, said the disruptions faced by Africa’s largest crude producer and others were contributing to the oil market imbalance.
This is happening as global oil demand has proven to be more resilient to the effects of the Omicron variant’s spread than expected.
“Demand dynamics are stronger than many of the market observers had thought, mainly due to the milder Omicron expectations.
“We see some of the key producers including Nigeria, Libya and also Ecuador that have serious supply disruptions,” Mr Birol said.
In Nigeria, production continues to be affected by technical and operational problems.
The head of the IEA also noted the supply disruptions in Kazakhstan following protests last week over the removal of fuel price caps also contributed to the imbalance with demand.
Ecuador has reduced oil production because of repairs on two key pipelines necessitated by advancing land erosion, but there are expectations on that end that output rates will return to normal next month.
On Libya’s end, Libya’s oil production is rising gradually with output at 963,000 barrels per day after a blockade of its western fields ended and ports in the east re-opened, according to the country’s energy minister, Mr Mohammed Oun said on Thursday.
Most other members of the Organisation of the Petroleum Exporting Countries (OPEC) and Russia have also found it hard to boost production in line with quotas.
The IEA forecast that global fuel consumption will decline considerably during this quarter because of pandemic-related restrictions, but it seems that the actual restrictions are not having such a grave effect on it.
At the same time, the IEA acknowledged in its December report that, unlike jet fuel demand, the demand for road transport fuels will remain strong even amid the latest surge in infections, also noting that it expected the effect of Omicron on oil demand to be more muted than previous strains.
The IEA forecast global oil demand to have grown by 5.4 million barrels per day in 2021, which is seen slowing down to 3.3 million barrels per day this year, with the total returning to pre-pandemic levels of 99.5 million barrels per day.
The next edition of the IEA’s Oil Market Report is scheduled for next Wednesday and may well contain some revisions in projections.
Modupe Gbadeyanka