The Oil market report for the fourth quarter of 2023, as stated by the International Energy Agency, predicts a slowdown in global oil demand growth in 2024. It is expected to decrease by 1.2 million barrels per day (mb/d) compared to the growth of 2.3 mb/d in 2023. This decline in projected oil demand can be attributed to various factors, including slower GDP growth in major economies, increased energy efficiency, and the electrification of vehicle fleets. On the other hand, the world oil supply is projected to increase by 1.5 mb/d, reaching a new high of 103.5 mb/d.
This growth is fueled by the record-setting output from non-OPEC countries such as the US, Brazil, Guyana, and Canada. OPEC supply, however, is expected to remain stable. The report also highlights discrepancies between targeted and actual production levels. With the anticipated increase in world oil supply, the price of crude oil is likely to experience significant fluctuations and may even fall below $77 per barrel. Consequently, it is crucial for the government to prioritize diversifying the economy in order to reduce vulnerability to oil price fluctuations.
By developing a resilient and diversified economy, Nigeria can enhance its ability to withstand volatility in the global oil market. It is recommended that revenue from crude oil be transparently allocated towards the development of non-oil sectors such as agriculture, manufacturing, technology, and tourism. This will create alternative sources of revenue for the country.