Geopolitics Geopolitics, the effects of geography on international politics and international relations - continue to affect oil prices. Nigeria As one of the countries that were granted exemptions from the OPEC output curtailment deal formally agreed early December 2016, Nigeria was producing 2.2m barrels per day (bpd) before the militant group Niger Delta began to sabotage and destroy oil infrastructures. It was on these grounds that the exemption was granted. Production in Mid Dec 2016 stood at approximately 1.8m bpd; higher than the average of around 1.6m bpd achieved in Q3 2016. There is still 0.4m bpd of room on the upside before reaching peak output. Only recently, in early Jan 2017, the country’s output was boosted by 0.1m bpd as upgrade efforts at 18 wells were completed. Similar works are to be completed in the months ahead which will further boost output. This would offset and slightly derail OPEC’s announced output cut of 1.2m bpd during 2017. It seems likely that this would be the case for 2017 as the government’s priority is lasting peace – referring to a bid to work with the Niger Avengers to avoid crippling attacks on oil infrastructures. Payments of cash stipends to ex militants under the 2009 amnesty were resumed in Jan 2017.
Nigeria relies on crude sales for 70 percent of government revenue.
Source: Bloomberg/Global Risk Management
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