Continental oil kings missing out on evolving oil dynamics

Uncertainty around global growth has widened the range of possible outcomes for oil consumption. While demand growth currently lags behind supply, stronger-than-expected trade or industrial activity could lift demand above projections. This brief explores whether Nigeria and Algeria are positioned to take advantage of such an upside.

What you will learn:

• There is limited scope for these two countries to increase oil production over the near term. Yet, both countries have recently announced plans and investment deals that show upside potential for medium-term production capabilities.
• Nigeria has made significant strides in driving oil production higher, but the nation is also planning to substantially ramp up its refining capacity. The country will likely prioritise local refining demand to avoid resorting to imported oil, negating the opportunity to meet oil demand elsewhere. Still, stronger production will deliver macroeconomic benefits.
• Algeria’s oil production is rising as Opec continues to increase output after voluntary cuts in November 2023. Algeria, with a sustainable capacity of around 1.01 million bpd, has scope to increase production. In such a scenario, we project that the country will experience accelerated economic growth next year, accompanied by narrower fiscal and current account deficits.