As the Delta variant of the ravaging coronavirus continues to threaten economies around the world, the price of crude oil is projected to ratchet around the $70.00 mark due to suppressed demand. Hence, Nigeria’s Bonny light production is expected to remain stagnant into the fourth quarter of 2021.
The Organisation of Petroleum Exporting Countries (OPEC) bolstered that projection when it said yesterday that world oil demand prospects going into the last quarter of 2021 is being clouded by increased risk of the COVID-19 Delta variant.
OPEC made this known in its Oil Market Report for September 2021 yesterday.
The report said that world oil demand growth in 2021 remained unchanged from the August assessment, showing growth of 6.0 million barrels per day despite some offsetting revisions.
It also said: “Oil demand in the Third Quarter of 2021 (3Q21) has proved to be resilient, supported by rising mobility and travelling activities, particularly in the Organisation for Economic Cooperation and Development (OECD).
“At the same time, the increased risk of COVID-19 cases primarily fuelled by the Delta variant is clouding oil demand prospects going into the final quarter of the year, resulting in downward adjustments to 4Q21 estimates.
“Consequently, the second half of 2021 oil demand has been adjusted slightly lower, partially delaying the oil demand recovery into the first half of 2022.”
According to the report, global oil demand in 2021 is now estimated to average 96.7 million barrels per day.
It added that in 2022, oil demand is expected to robustly grow by around 4.2 million barrels per day, some 0.9 mb/d higher compared to last month’s assessment.
“Revisions were driven by both the OECD and non-OECD, as the recovery in various fuels is expected to be stronger than anticipated and further supported by a steady economic outlook in all regions.
“Oil demand in 2022 is now projected to reach 100.8 mb/d, exceeding pre-pandemic levels,” the report said.
NATIONAL ECONOMY’s tracking of the price of Brent crude as of 22:15hrs yesterday showed $73.66, against $55.77 as of January 1, 2021.
Before the emergence of the Delta variant of the coronavirus, industry pundits had projected that the price of Brent crude would hit the $100.00 mark some time in 2021.
That prognosis has been shifted to 2021, when it is predicted that much of the G-20 economies will have been vaccinated and the world economy will have nearly fully rebounded.
There are concerns, however, that Nigeria would benefit maximally from increased demand and quota considering that the country produced 315,000 barrels less than its quota due to reduced capacity.
Over the past few years, Africa’s top oil exporter, has been beset by a multitude of problems, notably decreased crude production and exports, oil theft and pipeline attacks, stalled economic reforms and recovery, and the threat of oil price volatility.
The passage of the Petroleum Industry Act, many pundits say, will attract foreign investments into the country and rev up production capacity in the near future.