Nigeria’s oil export has received a major boost as the U.S increased their crude oil imports from Africa, doubling the volumes of oil import to the U.S in May 2019.
The development is coming against the backdrop of U.S sanctions that restricted usual providers of widely used grades, even as the country gears up for the peak driving season.
According to report, Nigeria, alongside other countries like Iraq, Brazil, and Angola are set to deliver their most crude oil to the United States, in order to ease up heavy crude oil demands in the country.
Specifically, these countries are expected to come in at about 1.23 million barrels per day (bpd), more than double April’s haul. The cargoes will include 11 tankers carrying about 600,000 bpd of Iraqi crude; the most from that country in a year.
Bump due to declining OPEC supply and Sanctions – The rise in import demands for Nigeria and other countries’ crude oil is traceable to reduced supply from Venezuela and Iran due to U.S. sanctions and declining OPEC’s production cut that has cut of medium sour grades.
“Cargoes from these four countries are designed to offset a majority of the loss” of Venezuelan heavy crude from sanctions.”– trade sources
Iran has not minced words when it comes to the notion of OPEC members picking up the slack where oil is concerned. Just last week, the country made bold claims:
“Saudi Arabia and UAE will draw the death and collapse of OPEC, should they fill the void left by Iranian oil barrels being restricted in the market, chastising OPEC members who wielded oil as a weapon.”
Millions of Crude stranded in the Atlantic – There have been several reported cases of crude oil languishing at certain shores without buyers. Also, report has shown that while Venezuela maintains that its oil exports remain high, the country seems to be counting the total tanker loadings, and not actual departures or off-loading. According to Samir Mandani, co-founder of TankerTrackers:
“What you get is a large parking lot of floating storage, actual exports are now sub-one million barrels per day.”
Earlier, Nairametrics had reported that Nigeria is among the top 10 countries of U.S Crude export market. However, Nigeria’s crude oil has not been in demand by the U.S in recent times.
Nigeria and Angola to deliver high – The news of U.S turning to some of Africa’s biggest oil producers (i.e.Nigeria and Angola) to deliver 420,000 bpd combined this month, is a great relief in the face of falling oil prices.
Another 1 million barrels of medium crude from Nigeria and Myrtos are scheduled to arrive this month.
Also, the U.S is expecting delivery of 206,000 bpd of Brazilian crude due to land in May. A further breakdown reveals that four tankers will deliver a combined 95,000 barrels per day (bpd) of crude from Iraq, Nigeria, and Brazil to Chevron Corp’s Pascagoula, Mississippi refinery, the most from those three countries in more than a year.
U.S demand to help stabilise Nigeria’s oil revenue amidst falling prices – The US bump in crude oil imports from Nigeria will in the meantime stabilize Nigeria’s revenue amidst dwindling oil prices. Several interplays ranging from the U.S sanctions and OPEC’s alliance is having negative effects on the oil price. Against the recent reported six-month high in the oil price of S74.36 two weeks ago, bent crude oil price as of today has dropped to $69.53.
Falling crude oil price is expected to have dwindling effects on Nigeria’s revenue. However, the imports demand from the U.S will serve as a shock absorber for the country’ main revenue base.