Oil prices have continued to rise as the political crisis in Nigeria has worsened and oil output there has declined. A reported drop in Iranian output in July has contributed to the tight supplies and the continued strength of oil prices. Brent for September delivery was trading at around $18 a barrel in the second week of August.
Production in Nigeria has dropped by 25 per cent, to about 1.4 million barrels a day (b/d), since the oil strike began. Further cuts are expected during the course of the month as foreign staff are evacuated and installations are closed down. Production in Iran is also about 200,000 b/d lower than its OPEC quota.
The latest market forecasts from the Paris-based International Energy Agency (IEA) point to stronger growth in demand in the fourth quarter of this year and the first quarter of 1995. The IEA says that world oil demand will reach 70.2 million b/d in the first quarter of 1995, compared with 69.3 million b/d in January-March this year. The extra demand is coming from Europe, the Pacific and non-OECD economies in Asia. The stronger growth rates imply a call on OPEC supplies of 26.2 million b/d in the first quarter, the IEA estimates. The present OPEC quota is 24.52 b/d.