Nigeria has yet to clear more than half of its scheduled crude oil cargoes for May as unsold crude oil starts to build up in the oil market.
According to a report by Bloomberg, traders who specialize in West African crudes report that over 30 of the nation’s cargoes are still on the market, searching for buyers.
The report further indicates that at least 53 cargoes are scheduled for loading out of Nigeria in the coming month.
The majority of the shipments scheduled are substantial, each consisting of one million barrels of crude oil.
As one of the leading crude oil exporters in Africa, Nigeria’s crude cargoes, available for trading in Asia, Europe, and the US, are meticulously observed as an important aspect of the market.
Recommended reading: Nigeria’s crude oil production drops to 1.23 million bpd for March – OPEC
Factors affecting Sales of Nigeria’s Crude Oil
According to Bloomberg, Nigeria’s crude oil sales on the global market are slowing due to several factors, such as the demand mechanism, competition from other producers, and premium pricing for supplies available immediately.
- For instance, market analysts report that heavy refinery maintenance in Europe has curtailed demand for Nigerian oil, causing an accumulation of surplus barrels from April into the May trading cycle.
- In addition, industry insiders noted that competitive oil producers in the Mediterranean have been reducing Nigeria’s market share.
- Sales from the West African country are also struggling due to higher freight costs and premium prices for immediate supplies.
- In contrast, Angola’s crude oil sales for May are relatively stable, with just five or six of the planned 34 shipments remaining unsold.
Nigeria’s crude oil has seen strong demand from Asian buyers, particularly in China and India. Additionally, the International Energy Agency’s monthly report highlighted robust demand for Angolan barrels in India.
What you should know
Nairametrics reported earlier that Nigeria’s crude oil production for March dropped to 1.23 million barrels daily according to latest data from the OPEC’s monthly oil market report for March.
- There was a decrease of 92,000 barrels from February 2024’s daily production of 1.32 million barrels.
- The country’s crude oil production in March was the lowest this year and falls below the benchmark crude oil production of 1.78 million barrels daily in the 2024 budget.
- Accordingly, the reduction in crude oil production leads to lower income from oil sales and decreased foreign exchange for the federal government.