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Home Business News

Oil traders unwilling to buy Nigerian crude despite discounted at $10 per barrel

Chike OlisahbyChike Olisah
3 years ago
in Business News
Brent crude drops to $25, oil demand drops by about 10% of world’s consumption, Brent Crude Oil hits $26, as Nigeria's Sweet Crude demand falls, Oil price pushes up before OPEC meeting, Asian equity markets mixed, NIGERIA OIL: Darker days ahead as Brent falls below production cost, Brent crude drops, as oil traders focus on OPEC+ meeting
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There seems to be no respite for the global oil market crisis, as it keeps getting exacerbated by several factors, one of them being the global slump in crude oil prices which continues unabated.

The crisis in the global oil market seems to be hitting Nigeria harder since the country’s economy is largely dependent on crude oil proceeds. To make matters worse, it has become more difficult to sell the oil, even at ridiculously low rates.

Late on Monday, Nigeria released the prices for most of its crude oil grades for sale in May. These prices reflect an urgent need to offload cargoes in the midst of piled up inventory of unsold crude oil, in a highly competitive market right now.

However, even with the discounted prices of $10 a barrel or less, the oil traders are still pessimistic, as they believe that enough buyers might not be tempted to buy crude oil if the market situation does not improve due to the demand collapse triggered by the coronavirus disease.

READ ALSO: West Africa’s crude inventory is building up as demand slows due to Coronavirus

Nigeria, which mostly sells light crudes that are low in sulfur, lacks the space to store unsold crude. This situation is not helped by the high cost of hiring ships for supplies since many tankers are being used as floating storage.

According to Bloomberg, two Nigerian crude oil grades, Bonny Light and Qua Iboe, will be selling at discounts of $3.95 and $3.92 respectively to dated Brent crude in May.

It was even reported that in the thick of the market crisis in April, with the low demand and storage crisis, some of the Nigerian crude oil grades was sold at a discount of about $5 per barrel. Some of the analysts believe that the very low prices might still not be enough for the country to sell its excess cargoes, as about 30 out of the 65 May loading cargoes are still unsold.

READ ALSO: Nigeria seeks bank documents of former President, others over $9.6 billion P&ID case

The oil market has been so negatively impacted by the coronavirus pandemic, that about 35 million barrels a day of crude oil demand have been lost. Even the output cuts by OPEC+ and top oil-producing countries have not stopped the slide in the global oil market.

Related

Tags: Bonny Light Crude OilBrent Crude oil priceBusiness NewsCOVID-19 lockdownLow oil pricesNigerian Business NewsOil market crisisoil marketsOPEC

Comments 1

  1. Lucky Ibrahim says:
    November 7, 2020 at 8:22 pm

    Please, how can I sell crude oil from nigeria. Have been given a contract to sell over 2million barrel

    Reply

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