Prices of Nigeria’s bonny light crude oil products remained stable despite the oil price crashes widely reported yesterday. Oil prices, particularly WTI, crashed below $0 during on Monday for the first time ever sending shock waves across the world.
The price of oil reported daily is sourced from the futures market which captures market prices of crude oil that are likely to be paid in future months. Despite the fall into negative territory for the WTI crude oil price, Nigeria flagships Qua Iboe, Bonny Light and Brass remained above $20 per barrel. As at Tuesday morning, the prices were as follows;
Bonny Light – $20.88
Brass River – $22.75
Qua Iboe – $22.75
The Central Bank publishes Bonny Light figures daily and is the main source of crude oil output from Nigeria. According to information from an oil and gas expert, each of these crude types is also associated with the export terminals.
Bonny Light for example, is exported by Shell Terminal while Qua Iboe is exported via Mobile Terminal, Brass River crude is exported via Eni/Agip Terminal. Nigeria exports more of Bonny Light crude followed by Qua Iboe and then Brass. Local oil-producing firms such as Oando, Seplat all export via these terminals.
Nigeria typically benchmarks its budget against the Brent Crude which fell to $21.37 per barrel far lower than the $30 per barrel revised price and way off the $57/b price passed in the budget earlier in the year. Despite avoiding the crash of yesterday, Nigeria still retains unsold cargoes as demand remains low. Nairametrics reported earlier in the weak that the Crude OIl prices for its Bonny Light crude fell to as much as $12 per barrel as traders declined to purchase crude cargoes. The prices quoted by the market is thus not entirely reflective in all price offerings.
Nigeria’s crude oil exports have been cut by over 400,000 b/pd following a decision by OPEC members to cut crude oil output. OPEC will be cutting about 9.7 million b/pd. Unfortunately, it is not enough as the Internal Energy Agency expects a demand gap of about 28 million b/pd signaling that the OPEC and G7 landmark deal may not be enough to stabilize prices yet alone increase it. The result was a record fall into zero territory for the first time ever.