The Organisation of the Petroleum Exporting Countries (OPEC), has revised downward its world oil demand in 2020, to an estimated 8.9 million barrel per day (bpd) adjusting it up by 0.1 million bpd against last month’s projection.

OPEC’s projections enclosed in its July Monthly Oil Market Report, comes amid uncertainties clouding the extension of production cuts earlier agreed with allies to stabilise the market, as some analysts forecast price, insisting extension of the cuts may be suicidal.

This week, OPEC expects to hold a committee meeting to assess the status of the oil market and decide on its next steps.

The cartel currently agreed on a 9.7 million bpd cuts, which expires at July end and likely to be reduced further to 7.7 million bpd.

OPEC said the upward revision reflects slightly better-than-expected oil demand from the Organisation for Economic Co-operation and Development (OECD) region in the second quarters (Q2) of 2020, and offsets downward adjustments to non-OECD demand during the same quarter.

While Nigeria had revised crude oil benchmark from $57 per barrels in the earlier budget to $25 in the new budget of N10.8 trillion signed last week by President Muhammadu Buhari, a former President of the Chartered Institute of Banker of Nigeria (CIBN), Prof. Segun Ajibola, noted that the resurging cases of COVID-19 would also affect oil prices.

With the revised budget benchmark, Ajibola stressed the need for Nigeria to improve the Excess Crude Account, stating that living without some buffers would continue to leave the economy vulnerable to external shocks.

“The implication of reintroduction of lockdown is imminent. We just passed the budget, but there is nothing you can plan with certainty if every of that plan is annexed to oil in terms of volume or price. That is the predicament we face as a country,” he said.

“When we have more than we budgeted, we should take a buffer. We need to discipline ourselves to the extent that we retain savings in the Excess Crude Account; if the price or quantity falls, we can rely on it. It is painful that we spend excess when we have it,” Ajibola stated.

PricewaterhouseCoopers’s Associate Director, Energy, Utilities and Resources, Habeeb Jaiyeola, decried the implications of the second wave of the pandemic.

Jaiyeola however envisages that price may remain relatively fair, arguing that countries would rather find ways to live with the virus instead of a total lockdown of the global economy, as witnessed previously.

“Many countries are cautious, this will affect demand. OPEC’s role will continue to be a significant tool for the market to stabilise. We may not be back to the good old days but the prices may remain a little fair,” Jaiyeola said.

OPEC, in its report said: “Oil demand growth in the OECD region was revised higher by around 1.0 million bpd for the year, and by approximately 0.3 million bpd in 2020. The upward adjustment was mainly the result of better-than-expected data for diesel in OECD Europe and Asia Pacific, as well as for petrochemical feedstock in OECD Americas.

“Oil demand growth in the non-OECD region was revised lower by 0.2 and 0.4 million bpd in first quarter 2020 and second quarter 2020, respectively — around 0.1 million bpd on average for 2020, mainly accounting for weaker-than-expected demand in the other Asia region (including India, Indonesia, Thailand and Singapore),” OPEC stated.

The group estimated total global oil demand at 90.7 million bpd in 2020, with higher demand expected in H2 2020 compared with H1.

In 2021, OPEC said oil demand would partially recover from the downturn exhibited in 2020, and still registers historically high growth of around 7.0 million bpd year-on-year.