Data from Mar-2023 Monthly Oil Market Report by the Organisation of the Petroleum Exporting Countries (OPEC, or Oil Cartel) revealed a downward revision of its crude oil demand from 29.5mbpd to 29.3mbpd (FY-2023), showing a drop of 0.2mbpd for the full year. On a quarterly basis, the forecast for crude oil demand was revised downward by 0.3mbpd (Q1), 0.0mbpd (Q2), 0.1mbpd (Q3) and 0.3mbpd (Q4) to settle at 28.8mbpd (Q1), 28.6mbpd (Q2), 29.5mbpd (Q3) and 30.1mbpd (Q4) respectively. The downward revision of crude oil demand was centered on expected increase in non-OPEC crude oil supply in 2023.

Conversely, global oil demand is expected to expand by 2.3mbpd to settle at 101.9mbpd in 2023. In the same vein, Organization for Economic Co-operation and Development (OECD) and non-OECD demand were forecasted to grow at 0.2mbpd and 2.1mbpd respectively. The expected increase in global demand for crude oil was hinged on  improved optimism in Chinese oil demand, with jet, kerosene, and gasoline leading the demand growth. However, demand is forecasted to diminish in OECD Americas and Europe.

Looking forward, we do not envisage the downward revision in OPEC’s crude oil demand to affect Nigeria’s oil revenues. Firstly, oil prices have remained relatively stable, and we expect Bonny light crude prices to remain elevated, oscillating around the $80.0/barrel mark for most of the year, which is comfortably above the $75.0/barrel price in the 2023 budget. Furthermore, despite improved efforts by the Federal Government, which led to a 3.8% m/m increase in daily average oil production in Feb-2023, current production levels (1.3mbpd) are still below Nigeria’s OPEC’s production quota of 1.74mbpd and below the budgeted average of 1.69mbpd.