Oil prices climbed above $81 per barrel yesterday, following the release of the latest Monthly Oil Market Report (MOMR) by the Organisation of Petroleum Exporting Countries (OPEC) and projections by Energy Information Administration showing an inventory drop of two million barrels for the second week of the year.
This development comes as OPEC put Nigeria’s oil production for December at 1.5 million bpd. The output rose by about 100,000 bpd against the figure in November but far below the 2.06 million bpd being expected for the 2025 budget. OPEC projected surge in global oil demand through 2025 and 2026, potentially providing revenue windfalls for oil-dependent economies like Nigeria.
However, the development could also exacerbate domestic challenges, including increased fuel prices and higher energy costs for households and businesses that are struggling with erratic power supply.
OPEC forecasts a robust increase in global oil demand of 1.4 million bpd in 2025, driven predominantly by non-OECD countries, which are expected to contribute 1.3 million bpd to the growth, compared to just 0.1 million bpd from OECD nations. The organisation anticipated a similar trend in 2026, with non-OECD countries once again leading the demand surge.
On the supply front, non-Declaration of Cooperation (non-DoC) liquids supply is expected to grow by 1.1 bpd year-on-year (Y/Y) in 2025 and 2026, with the United States, Brazil, and Canada as key contributors.
OPEC-member countries involved in the Declaration of Cooperation (DoC), alongside non-OPEC partners, are projected to modestly increase the supply of natural gas liquids (NGLs) and non-conventional liquids by 90,000 bpd in 2025 and 100,000 b/d in 2026.
Although cost of oil production remained high in Nigeria as oil theft persists, Nigeria stands to benefit from the rise in oil prices, with increased revenues potentially shoring up its foreign exchange reserves and strengthening its economy.
The energy crisis, characterised by frequent blackouts and reliance on diesel generators for power, could deepen as businesses and households face escalating costs.
On the refining side, OPEC noted that refinery margins declined December in the US Gulf Coast (USGC) and in Singapore as the weakness was seen all across the barrel except for jet/kerosene on the USGC and 92 gasoline in Singapore as healthy refinery runs led to rising product availability while weak export incentives added to the pressure.
However, in Rotterdam, where Nigeria historically sources its products, refining margins extended their upward trajectory amid improved travel activities during the year-end holiday season, with gasoline, gasoil and more pronouncedly fuel oil 1.0 per cent backing the monthly gain.
The report noted that global refinery intake increased further adding 1.1 million bpd month-on-month as offline capacities trended significantly lower in December, in line with historic data.
Global intakes reached an average of 82.2 million bpd in December as the organisation said run rates are expected to remain sustained.
