Nigeria’s position in global oil sales is being threatened by the United States oil surge and expansion. With Nigeria’s export into the U.S. hitting a new low, the latter is pushing further into Nigeria’s oil customer base. This, many people believe, could further cut the demand for Nigeria’s crude oil.
Europe, India and some parts of Asia have been the stronghold of Nigeria in terms of oil export but the country that has for long depended on its revenue from oil to maintain its position as Africa’s largest economy is gradually losing out.
According to reports, since the beginning of this year, Europe has accounted for 46% of Nigeria’s crude oil export, India has accounted for 18% of Nigeria’s crude oil export, while the remaining regions in Asia have accounted for 10%.
But Nigeria’s attempt to get an increment or maintain steady export to these countries, according to IHS Markit, an Oil industry information company, is under threat as the U.S. oil was said to have experienced an upward growth by 260,000 barrels per day in June to a monthly record of 3.16 million bpd. The growth was engineered by Donald Trump’s policy to strengthen the US’ grip on the oil market around the world.
The US phasing out Nigeria: This show of strength came at a period Nigeria’s crude oil export to the U.S. is at an all-time low as a result of the latter’s attempt to phase out Nigeria’s oil in its market. Nigeria’s oil export to the US dropped to zero for the most of July, according to the U.S. Energy Information Administration.
A major buyer told Reuters that, “Nigeria is facing bigger competition from the U.S., and in the last few weeks, the US exports have really picked up.
“As many as 40 cargoes for export in August were still in need of buyers when Nigeria began publishing its preliminary programme for September exports beginning on July 18. It was the largest oversupply so far in 2019, with about 25 cargoes as the monthly norm.
“Though the excess has begun to clear, in part due to energy majors absorbing most of the excess into their own refining systems, the discounts sellers made to attract interest have lowered price expectations for Nigerian exports for September.
“They’ve got a big volume still remaining, and though the number of cargoes left for August is in the single digits, it seems to be taking longer and longer to clear lately. It’s not a pretty picture.”
More problems for Nigeria: The United States is not only trying to phase out Nigeria’s crude oil in the American market, but the country is also threatening Nigeria’s position in Europe and Asia. Also, one of Nigeria’s key buyers, Philadelphia Energy Solutions (PES) refinery, shut down due to a fire outbreak on June 21. It seems like there are more troubles than Nigeria can handle at once or in a short period.
Nigeria is running out of time because the world is diversifying and other countries are making an inroad into energy. Although the significance of oil is still enormous, reduction in Nigeria’s oil revenue will be detrimental to the country’s GDP.
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Conspiracy? With all these happening at the same time, it seems there’s a conspiracy against Nigeria’s oil. Earlier this month, OPEC production slumped to a 5-year low, with production drop in Nigeria contributing to the decline which occurred during a period oil production is usually higher, it means the decline didn’t end on Nigeria’s table.
Despite the positive outlook projected for Nigeria’s crude oil export to the US in May prompted by U.S. sanctions on Iran and Venezuela, Nigeria recorded zero demand for three weeks in July. It now seems that there is no situation that could boost Nigeria’s crude oil export to the U.S.
It should be noted that Nigeria’s crude oil was not demanded by the United States for some weeks between February and March 2019. Nigeria, however, remains among the top ten crude oil-exporting countries to the U.S., ranking 7th on the list behind Canada, Saudi Arabia, Venezuela, Mexico, Iraq, and Columbia.
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