FORMER Group Managing Director of the Nigerian National Petroleum Corporation (NNPC) and the Secretary-General of the Organization of Petroleum Exporting Countries (OPEC), Mohammad Barkindo, has hinted that global oil consumption would hit 100 million barrels per day later this year, sooner than earlier projected.
OPEC and other producers led by Russia last year began withholding 1.8 million barrels per day (bpd) of supplies to tighten the oil market and prop up prices that in 2016 fell to their lowest in more than a decade.
Both Russia and OPEC leader, Saudi Arabia, have spoken about the need for a gradual increase in oil production as the goal of removing excessive oil stockpiles has now been achieved and the market has been broadly balanced.
“The world will attain the 100 million barrels a day mark of consumption later this year, much sooner than we all earlier projected. Therefore stabilising forces which create conditions conducive to attracting investments are essential,” Barkindo told an oil and power conference in South Africa’s Cape Town.
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He added that oil industry confidence was beginning to return and that OPEC was exploring ways of further institutionalising a declaration of cooperation on oil output between OPEC and non-OPEC oil producers.
“Going forward, the priority is on ensuring stability is sustainable, spreading confidence in the industry and encouraging an environment conducive to the return of investments,” he added.
“The prospects of increased supplies from OPEC and her allies, and weaker demand from China and other emerging markets could weigh further on oil prices going forward, or at least limit the upside potential,” said Fawad Razaqzada, market analyst at futures brokerage Forex.
“In part, this is because of the U.S.-dollar’s strength, weighing heavily on emerging market currencies, including the yuan, which in turn has pushed up the costs of all dollar-denominated commodities,” he added. For now, however, oil demand remains strong, not least in the United States.
Nigeria is expected to sustain its 2.3 million bpd quota by OPEC; this may be achieved by ensuring there sustained peace in the Niger Delta region of the country.
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