Nigeria : Nigerian crude takes new hit as buyers turn to cheaper Russian grade
on 2023/6/11 9:26:44

Click to see original Image in a new window
Traders are flocking to the Urals crude blend because they see the Nigerian grades as relatively pricey, with traders reluctant to offload the country’s cargoes.

Nigerian crude grades are failing to attract buyers from Europe, China and India as traders, to cut cost, shift to a blend of WTI (the main oil benchmark for North America) and Brazilian grades as a substitute for the country’s highly sought-after sweet crude.

Top crude grades of Africa’s biggest oil producer, Bonny Light, Forcados and Brass, have a reputation for being light in sulphur, a quality that has made them the darling of refineries in Europe and Asia.

But traders are flocking to the Urals crude blend because they see the Nigerian grades as relatively pricey, with traders reluctant to offload the country’s cargoes, according to S&P Global Commodity Insights.

That had driven Nigeria’s premium grade Bonny Light to 50 cents per barrel discount to Dated Brent on 6 June.
“WAF (West Africa) is losing out to alternatives in Europe – WTI, Midland and Brazilian grades have been consistently undercutting differentials, and sellers of Nigerian barrels just cannot find demand in Europe,” the research house said, quoting a source.

The development adds more pain to the woes of Nigeria, where output hit a multi-decade low of below 1 million barrels a day last year. Already, the nation has struggled to contain incidents of oil theft on a grand scale in the far south which sapped as much as $1 billion from the government’s revenue in the first quarter of the year.

That production level is less than half of the country’s current daily capacity of 2.2 million barrels.

On account of a price ceiling placed on the crude oil from Russia following its war with Ukraine, which has made the grade cheaper, African crude graders are struggling to find patronage from refiners in Asia, outsold by the Urals crude.

“I don’t think Nigeria can sustain competition with WTI Midland mixed with Brazil, it’s been a long time now since we have seen Europe able to absorb Nigerian exports,” a source told S&P Global Commodity Insights.

It comes as an early blow to plans by newly-inaugurated President Bola Tinubu to bolster production and buck up oil earnings, at a time the government is spending nearly everything it earns to service debt.

President Tinubu had promised in his manifesto ahead of the February presidential election to scale up Nigeria’s daily output to 2.6 million barrels by 2027 and 4 million come 2030.

That compares to April’s production (condensate inclusive), which fell 17.8 per cent to 1.25 million bpd.

“Nigerian producers have to lower prices to compete,” said Uwadiae Osadiaye, a chartered financial analyst with Lagos-based FBNQuest.

Previous article - Next article Printer Friendly Page Send this Story to a Friend Create a PDF from the article

Other articles
2023/7/22 15:36:35 - Uncertainty looms as negotiations on the US-Kenya trade agreement proceeds without a timetable
2023/7/22 13:48:23 - 40 More Countries Want to Join BRICS, Says South Africa
2023/7/18 13:25:04 - South Africa’s Putin problem just got a lot more messy
2023/7/18 13:17:58 - Too Much Noise Over Russia’s Influence In Africa – OpEd
2023/7/18 11:15:08 - Lagos now most expensive state in Nigeria
2023/7/18 10:43:40 - Nigeria Customs Intercepts Arms, Ammunition From US
2023/7/17 16:07:56 - Minister Eli Cohen: Nairobi visit has regional and strategic importance
2023/7/17 16:01:56 - Ruto Outlines Roadmap for Africa to Rival First World Countries
2023/7/17 15:47:30 - African heads of state arrive in Kenya for key meeting
2023/7/12 15:51:54 - Kenya, Iran sign five MoUs as Ruto rolls out red carpet for Raisi
2023/7/12 15:46:35 - Ambassador-at-Large for Global Women’s Issues Gupta Travels to Kenya and Rwanda
2023/7/2 14:57:52 - We Will Protect Water Catchments
2023/7/2 14:53:49 - Kenya records slight improvement in global peace ranking
2023/7/2 13:33:37 - South Sudan, South Africa forge joint efforts for peace in Sudan
2023/7/2 12:08:02 - Tinubu Ready To Assume Leadership Role In Africa
2023/7/2 10:50:34 - CDP ranks Nigeria, others low in zero-emission race
2023/6/19 15:30:00 - South Africa's Ramaphosa tells Putin Ukraine war must end
2023/6/17 15:30:20 - World Bank approves Sh45bn for Kenya Urban Programme
2023/6/17 15:25:47 - Sudan's military govt rejects Kenyan President Ruto as chief peace negotiatorThe Sudanese military government of Abdel Fattah al-Burhan has rejected Kenyan President William Ruto's leadership of the "Troika on Sudan."
2023/6/17 15:21:15 - Kenya Sells Record 2.2m Tonnes of Carbon Credits to Saudi Firms

The comments are owned by the author. We aren't responsible for their content.