Nigeria Q3'17 Trade Report - Oil exports lift current account to 3-year high
Oil exports lift current account to 3-year high
Driven by the highest quarterly exports in three years, Nigeria’s current account surplus rose to ₦1.2 trillion in Q3’17 (Q1’17: ₦719 billion, Q2’17: ₦506 billion), the highest since the 2014 oil price slump. The quarter’s performance was helped by a simultaneous increase in exports – ₦3.1 trillion to ₦3.6 trillion – and moderation in imports – ₦2.6 trillion to ₦2.4 trillion compared to Q2’17.
Accounting for 83% of total exports (previous: 78%), the surge in crude exports was the main driver of Nigeria’s strong export performance. With oil prices little changed q/q ($52.19/bbl in Q3’17 vs. $50.79/bbl in Q2’17), stronger oil earnings came on the back of continued improvements in domestic oil production. According to the Ministry of Petroleum Resources, average oil production for the quarter rose from 1.87 mb/d in Q2’17 to 2.03 mb/d in Q3’17, touching a 2017-high of 2.08 mb/d in August. Relatively stronger oil prices in the final quarter of the year (average of $60.26/bbl in October and November) and stable oil production (average: 2.03 mb/d in October and November) point towards another strong export performance for Q4’17. Going into 2018, stronger full-year oil output numbers (forecast: 2.10 mb/d) and relatively healthy global oil prices (IMF forecast: $51.00/bbl) would buoy Nigeria’s exports.
Crude oil sales will continue to drive Nigeria’s current account and given our positive outlook on this front, we foresee current account coming in strong going forward. On the import front, we expect relatively high global energy prices to slightly increase the value of imports given the price inelasticity of petroleum product demand. Overall, we expect Nigeria’s recovering current account to support dollar inflows.
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