Dear Reader,

For this request, I have decided to start my contribution by providing some facts and figures on the "global oil." At the end, a concise recommendation is given.

One has to firstly understand the foundation or basics on oil production, exportation, consumption, and concomitant economies of the key countries in the oil business.
What is OPEC+:

Is an intergovernmental organisation of oil-producing nations. It was founded in September 1960 in Baghdad, Iraq. The current membership is at 13 and has 10 other members. Thus, it is now known as OPEC+

It has to be noted that some of the world's leading oil producers are not members of OPEC. These include the USA, Russia, China, and Canada

OPEC's oil production:

OPEC+ countries possess approximately 80% of the world's known oil reserves

Its membership produces approximately 38% of the world's crude oil.

The top 5 oil producing countries (2023- bpd= barrels per day) are:

(1) USA: 20,213,000 bpd (20% of world's share of production)

(2) Saudi Arabia: 12,144,000 (12%)

(3) Russia: 10,938,000 (11%)

(4) Canada: 5,694,000 (6%)?

(5) China: 5,119,000 bpd

(6) Iraq: 4,553,000 bpd

In May 2023, OPEC+ decided to cut oil production by 1.6 million barrels per day for this year (2023).

The largest exporters of oil in the world:

(1) Saudi Arabia

Dec 2022: 7,363,640 bpd

2021: It accounted for 14.5% of the world's oil export

(2) Russia: 11.8%

(3) Canada: 8.54%

(4) Iraq: 7.57%

(5) USA: 7.11%

The top 5 highest consumers of oil in the world:

(1) United States: 19,690,000: 20.4% share of the world

(2) China: 15.7%

(3) India: 4.8%

(4) Russia: 3.8%

(5) Japan: 3.5%

The most influential economies in the global oil business:

From the above facts and figures, the leading key players in the global oil business are Saudi Arabia, Russia, China, USA, and, of course, all of the OPEC+ nations.

Boosting National Economic Growth & Cutting down inflation:

In July 2023, the IMF cut 2023 Saudi Arabia's GDP growth projection to 1.9% from 2.1%, reflecting the impact of prolonged oil production cuts.

In May 2023, Saudi Arabia decided to cut its oil supply by 500,000 barrels per day.

Iraq has decided to reduce over 200,000 bpd until the end of 2023.

Russia will extend its production cut of 50,000 bpd until the end of 2023.

USA: The annual inflation rate increased to 3.2% in July 2023 from 3% in June 2023.

Thus, the oil- producing countries, including those in Africa, are struggling to boost their respective national economic growths and cutting down inflations. The most plausible undertaking for them is cutting down oil production to bring about higher prices of their commodity (oil)

Moreover, world oil demand is getting higher due to increased oil use in electricity generation, increased summer air travels, and increased production in the Chinese petrochemical industries.

It is now estimated that global oil demand will increase to reach 102.2 million barrels a day in 2023. In 2022, the world oil production was approximately 80.75 million barrels per day.

Consequently, it is projected that oil prices are on the increase at least until the end of this year and may go into 2024.

The International Energy Agency (IEA)'s forecast is that Brent crude oil prices will average US dollars 86 in the second half of 2023.

Oil supply in Tanzania:

In brief, Tanzania has to do the following to make sure that the oil supply is uninterrupted and prices remain affordable:

(1) Strong local currency (Tsh) against hard currencies, including the US dollar

(2) Diversify oil market supply

(3) TIPER with modern technologies to process imported crude oil (are we importing crude oil or processed petroleum?)

(4) Establishment of a Strategic Petroleum Reserve (SPR) in the hands of the government

(5) Oil & Gas exploration: do we have oil in Tanzania?

(6) Gas Economy: a robust and a reliable economic engine supporting and strengthening other facets of the national economy

Sospeter Muhongo
Officier, de l'ordre des Palmes académiques

Wednesday, 6.9.2023


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