Libya has overtaken Nigeria as the biggest producer of crude oil in Africa based on the latest report by the Organization of the Petroleum Exporting Countries (OPEC).
Before overtaking Nigeria, Libya had previously leapfrogged Angola into second place but has now overtaken Nigeria as well to claim the status of Africa’s largest oil-producing country.
The OPEC report released on Wednesday showed that Nigeria’s oil production reduced to about 1.23 million barrels per day in October from about 1.25 million barrels per day in September.
However, for Libya, its production increased from 1.16 million barrels per day in September to 1.24 million barrels per day in October.
The reduction in Nigeria’s crude oil production were blamed on lack of investment in oil-producing facilities and the challenges of recurring militant attacks on key pipelines.
“Crude oil output increased mainly in Saudi Arabia, Venezuela, the UAE, and Kuwait, while production in Nigeria, Gabon and Equatorial Guinea declined,” OPEC said.
“However, soft demand from Asian refiners for Atlantic Basin crude amid unfavourable west-to-east arbitrage capped the rise. Crude differentials of Bonny Light, Forcados, and Qua Iboe rose firmly on a monthly average in October by 70¢, $1.06, and 75¢, respectively, to stand at premiums of 10¢/b, 27¢/b, and 4¢/b,” it added.
A London-based economic research firm, Capital Economics, said while the issues affecting reduced oil production might be resolved, it may not have much impact on the general trend of undersupply in the oil market.
“Once again, Angola and Nigeria were largely responsible for this undershoot. Operational issues brought about by a lack of investment in oil-producing facilities continue to plague output in both countries, while Nigeria is also grappling with recurring militant attacks on key pipelines,” it said.
It added that, “This will do little to alleviate the signs of undersupply in the oil market. For example, the price spreads between front-month futures and longer-dated futures are now as negative as any time in recent years, which normally indicates a lack of near-term supply.
“Despite persistently undershooting its target, we doubt OPEC will make any major changes to its output policy at its next meeting on December 2. Admittedly, external pressure on the group has continued to grow, with the US now reportedly considering a release of oil stocks from its strategic reserve.”
