Minister of state for oil, Sylva: Oil market battered by oversupply and coronavirus

It’s looking gloomier and gloomier for Nigeria in the oil sector as the United Arab Emirates, OPEC’s third biggest producer joined the oil price war, started by Saudi Arabia.

UAE’s Abu Dhabi National Oil Company (ADNOC) said on Wednesday it was positioned to boost its supply to the market to over 4 million bpd in April, one million bpd higher than current production.

The 1-million-bpd supply increase from the UAE in April adds to the 2.6 million bpd which Saudi Arabia promised to unleash on the oil market next month, resulting in a total increase of 3.6 million bpd in global oil supply from OPEC’s heavyweights at a time of depressed oil demand due to the coronavirus outbreak and at a time of crashing oil prices, following the abrupt end to the OPEC+ deal last week.

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It means for Nigeria, OPEC fifth producer,  the benchmark oil price of $57 governing the 2020 budget becomes more and more unrealistic as oil has fallen to $35 range and may even fall further with the oversupply from the Gulf region.

Oilprice.com reported that The UAE, which is OPEC’s third largest producer after Saudi Arabia and Iraq, has been pumping around 3 million bpd, in line with its commitment to stick to and even over-comply with the OPEC+ production cut deal, which fell apart last Friday.

“In line with our production capacity growth strategy announced by the Supreme Petroleum Council, we are in a position to supply the market with over 4 MMBPD in April,” ADNOC Group chief executive, Dr. Sultan Ahmed Al Jaber, said in a statement.

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ADNOC, which pumps nearly all the oil in the UAE, is also accelerating plans to increase its production capacity to 5 million bpd, Al Jaber said.