Based on survey data compiled by Reuters for the month of May, OPEC crude oil out has fallen by 120,000 barrels per day-a drop largely attributed to the resurgence of Niger Delta militancy.
On Monday, Nigeria's oil and condensate production was down to 1.1 million barrels per day, according to Nigerian petroleum officials, with 50 percent of output offline. Over one million barrels per day of production has been lost as Niger Delta militant attacks increase momentum, forcing supermajors to declare force majeure. Related: Oil Pauses At $50 Ahead Of OPEC Meeting
Four major crude export grades-Qua Iboe, Bonny Light, Brass River and Forcados-are now under force majeure.
This has balanced out increases in production in Saudi Arabia, Iran and Iraq-all of which are bent on securing more market share.
With oil prices having rebounded close to US$50 and output down for May already, there is little incentive for the top OPEC members to entertain any sort of production freeze at the Thursday meeting in Vienna.
WTI for July delivery was down to the $47 handle again. Brent North Sea crude for August delivery was down over 2 percent at $48.83 a barrel in London.
Both still finished higher for the fourth month in a row, however, with WTI up 6.9 percent in May and Brent up 3.2 percent, according to Nasdaq.
In the meantime, energy experts are chiming in Nigeria's loss of output, suggesting that Saudi Arabia and Iran will be keen to fill this void and scoop up extra market share. Related: Is This The Most Critical Gas Play In Decades?
An oil expert and Professor of Law and Co-Director, Institute for International and Immigration Law, Thurgood Marshall School of Law, Texas Southern University, United States, Emeka Duruigbo, said, "There is a real struggle to acquire or maintain market share by existing or fully returning players, notably Iran and Saudi Arabia," oil expert and law professor Emeka Duruigbo told The Punch.
"Any opening created by Nigeria's inability to meet its supply commitments is an invitation to these countries to exploit the gap and leverage their strengths. I would be deeply concerned if I were manning Nigeria's economic ship at the moment."
By James Burgess of Oilprice.com
More Top Reads From Oilprice.com:
James Burgess studied Business Management at the University of Nottingham. He has worked in property development, chartered surveying, marketing, law, and accounts. He has also… More