Oil prices are pushing towards $80 per barrel as a result of high aggregate production disruptions in Nigeria, Ecuador, and Libya amid the rapid spread of the Omicron coronavirus variant.
For the first time in three years, oil prices jumped to above $80 in October 2021 as the Organization of Petroleum Exporting Countries (OPEC) and its allies announced that it would maintain its steady output increase by 400,000 barrels per day in November.
On Thursday, the value of oil prices went up by 30 cents or 0.24 per cent to trade at $79.47 per barrel, while the United States West Texas Intermediate (WTI) crude rose by 37 cents or 0.28 per cent to sell at $76.84 per barrel.
Nigeria has been experiencing shut-ins due to pipeline vandalism, community interferences, sabotage of oil facilities, among others and this has limited Africa’s largest oil producer’s capabilities to increase its production in recent months.
Already, OPEC reports that between July, August, and September Nigeria recorded a shortfall of 130,000 barrels per day.
“Nigeria’s oil output dropped by 9.28 percent in Q3 2021 as average daily production dropped from 1.40 million barrels in June to 1.27 million barrels in August,” according to OPEC’s monthly oil market report.
NNPC oil production difficulty was highlighted in its August FAAC report in May, as it reported over 30 various disruptions from community clashes, fire outbreaks among other operational breakdowns.
The breakdown resulted in a production loss of 4,187,500 barrels of oil, which could have generated at least $286.9 million which equates to about N118.2 billion at a N412 exchange rate.
Ecuador’s government declared force majeure over its oil exports and production contracts on Monday because of the pipeline closures, caused by ongoing erosion in Napo province.
The country’s crude production averaged 485,000 barrels per day before the force majeure and by Tuesday it had fallen close to 220,000 barrels per day, according to government data.
Also in Libya, production from El Sharara, Libya’s largest field with a capacity of 300,000 barrels per day, as well as the El Feel, Wafa and Hamada fields, had been shut down by the Petroleum Facilities Guard (PFG), a paramilitary force whose brief is to protect NOC’s assets and facilities due to political dispute.