The Organisation of Petroleum Exporting Countries, OPEC, says global demand for its crude in 2021 remains unchanged from the previous report at 27.2 million barrels per day (bpd), which is about 5.0 million bpd higher than the figure in 2020.
This is contained in the cartel’s latest report which assumes a healthy recovery in economic activities, including industrial production, improving labour market and higher automobile sales than in 2020.
Despite maintaining its 2021 forecast for global oil demand growth, OPEC kept projections cautious following uncertainties over the devastating impact of the COVID-19 pandemic.
The cartel’s Monthly Oil Market Report, MOMR, for January corroborating secondary sources, shows that Nigeria’s Gross Domestic Product, GDP, is also expected to rise in the medium term, given the current rising oil prices and positive Covid-19 vaccine trail even as the economy remains challenged by inflationary pressures on the back of rising food prices and recent Naira adjustments
According to OPEC, the increasing food prices and possible Naira adjustments pose additional inflationary risks. Inflation rose by 1.60 per cent month-on-month in November 2020, the highest since May 2017, following an increase of 1.54 per cent in October 2020.
“Nigeria’s economy entered a recession in Q3, 2020 with real GDP contracting by 3.6 per cent year-on-year (y-o-y) after a sharp contraction of 6.1 per cent y-o-y in Q2, 2020. Moreover, the inflationary pressure continued to challenge Nigeria’s economy, as the Consumer Price Index rose to 14.9 per cent y-o y in November from 14.2 per cent y-o-y in October.” The report read.
On a bright note, the report said consumer confidence increased to -14.80 points in the forth quarter of 2020 from -21.20 points in the third quarter of the same year. on the other hand, the report noted that business confidence declined to -15.20 points in December from -15.0 points in November of 2020.
Quoting Moody’s, OPEC said Nigeria’s credit rate is now B2- (negative), which reflects increasing exposure to fiscal and external shocks within the limited fiscal resources available.
OPEC initially agreed to cut output by 9.7 million bpd, before easing cuts to 7.7 million and eventually scaling back further to 7.2 million from January.