Upcoming elections in oil producing states Nigeria and Libya may add a new twist to a familiar theme for OPEC. The oil exporting group’s strategy has repeatedly been adapted to suit the unpredictable political environment in these two African producers.
Both were excluded from the 1.8 million barrels per day production cut deal agreed by OPEC and Russia back in late 2016 to rebalance the market. Unrest has greatly diminished their abilities as major global producers and their influence within OPEC. Elections may not change their outlook but they could provide some much needed stability.
For Nigeria in particular, elections are scheduled for February 16. The sub-Saharan producer has made great strides in tackling militants who have repeatedly targeted its oil industry as crude and condensate production has recovered in the past 12 months to between 1.7 million bpd and 2 million bpd after output plummeted to near 30-year lows of 1.1 million bpd in mid-2016 due to renewed attacks in the Niger Delta.
But President Muhammadu Buhari’s administration faces a stiffer challenge as it heads into a volatile presidential campaign season. The danger is that supply disruptions in the Niger Delta might escalate in the months leading up to the elections and trouble Buhari’s chances of winning a second term. Both Nigeria and Libya have the potential to add extra barrels to the market but their ability to deliver could be complicated by their respective electoral processes.
Source: Energy Mix Report