- Nigeria, Africa’s top oil producer, is being sidelined as its production continues to decline, leaving OPEC giants to fill the void in global oil markets.
- Due to fears of a supply gap from U.S. sanctions on Russia, China and India are turning to Middle Eastern oil producers, including the UAE, Kuwait, and Iraq.
Oil refineries in China and India, major consumers of Russian oil, are increasingly turning to oil-producing nations in the Middle East, such as the United Arab Emirates (UAE), Kuwait, and Iraq, in response to fears that recent U.S. sanctions on Russia may lead to a supply gap.
According to a Bloomberg report, these OPEC members have received fresh inquiries from China and India, seeking to secure additional barrels in the coming months to avoid potential supply disruptions.
Nigeria, Africa’s largest oil producer, is sidelined in this development. Nigeria has struggled with declining oil output for several years despite being the continent’s top producer. Its crude production has steadily decreased, from an average of over 2 million barrels per day (bpd) in 2019 to approximately 1.5 million bpd in 2024.
The country’s production has failed to meet its OPEC quota for the past two years, and it has struggled to hit even its reduced target of 1.5 million bpd in 2024. Recent reports from the Nigerian Upstream Petroleum Regulatory Commission show that the country’s daily output, excluding condensates, was still shy of the required target, averaging just 1.484 million bpd in 2024.
In contrast, oil-producing giants like the UAE, Saudi Arabia, Iraq, and Kuwait stand to benefit from this supply gap. With surplus production capacities, these nations are positioned to fill the void left by Russian oil in global markets. China and India, two of the world’s largest and fastest-growing oil markets, have become critical players in the worldwide oil supply chain, further driving up demand for alternative sources of crude oil.
While OPEC has resisted increasing production to stabilize global oil prices and avoid creating a surplus, the actions of Russia, an OPEC+ member and a key supplier to China and India have forced the hand of its OPEC counterparts.
Despite Russia’s refusal to produce within its agreed quota, OPEC+ nations have worked to balance global prices by limiting output. OPEC +countries, including Saudi Arabia and the UAE, are expected to play a more prominent role in stabilizing the market by covering Russia’s lost oil production due to sanctions.
As U.S. sanctions on Russia intensify, oil traders are optimistic about OPEC’s ability to maintain price stability. However, concerns over supply risks from other major oil producers, including Iran, complicate the global oil market. With China and India increasingly turning to OPEC giants, the Middle East may be poised to see more significant influence in global oil supply chains.