Oil price rises to $86 a barrel as IEA forecasts record-high demand

Oil prices increased on Friday, after the International Energy Agency (IEA) predicted that a record-high global demand would be reached this year as a result of a rebound in Chinese demand.

Brent crude rose 0.24 percent to $86.25 per barrel, while West Texas Intermediate crude (WTI) rose 0.41 percent to $82.50.

Last week, some members of the Organisation of Petroleum Exporting Countries and its allies, known as OPEC+, announced a new voluntary production, in addition to the two million barrels of oil per day output cut that was already in place.

Following the action, oil price in the international market rose from below $80 to as high as $87 a barrel.

In its latest report released on Friday, the IEA said the production cuts announced by OPEC+ could worsen oil supply shortage as well as hurt consumers and global economic recovery.

Due to the extra OPEC+ cuts, the agency projected that global oil supply would fall by 400,000 bpd by the end of the year.

IEA explained that an expected production increase of one million bpd from non-OPEC members beginning in March, would fail to offset a 1.4 million bpd decline from the producer bloc.

According to the organisation, the world’s oil demand is expected to reach a record-high of 101.9 million bpd in 2023, up by 2 million bpd from the previous year; primarily due to increased Chinese demand following the removal of COVID restrictions.

Meanwhile, oil output by Nigeria — a major OPEC member — dropped to an average of 1,268,202 bpd in March 2023, after a sustained production increase from September 2022 to February 2023. 

The recent decline followed an explosion that rocked a crude oil tapping point in Rumuekpe community in Emuoha local government area of Rivers state — the country’s south-south region.

Oil theft and illegal refining are not new in Nigeria’s Niger Delta region.

Recently, the Defence Headquarters (DHQ) had said its troops destroyed 50 illegal refining sites in the region in two weeks.

Musa Danmadami, director of the defence media operations, said the troops also destroyed 22 wooden boats, 237 storage tanks, 204 ovens, and 30 dugout pits used for illegal oil bunkering.

Last year, the Nigerian National Petroleum Corporation Limited (NNPC) detected an illegal connection on the Trans Escravos pipeline, looped to the four-kilometre Afremo test line.