Nigerian crude ended the day slightly unchanged as investors evaluated whether a potential agreement between the US and Russia to end the conflict in Ukraine would gain international support and significantly impact Russian crude flows.
Bonny Light just managed to break a six-session losing streak at $68.85 a barrel.
The US and Russia are trying to reach an agreement that would guarantee Russia’s occupation of land seized during its invasion.
Washington is seeking support for it from Ukraine and European allies, although the agreement remains uncertain.
President Donald Trump recently doubled levies on all Indian imports to 50 percent as punishment for importing Russian crude and threatened to impose similar measures on China.
The United States and the European Union have targeted Russia’s oil revenues in response to its invasion of Ukraine. However, investors remain doubtful that Europe would support a deal that would be a significant win for Russia.
However, in recent years, oil producers, traders, and consumers have shown skill in managing supply issues, whether caused by administrative barriers like tariffs and sanctions, geopolitical threats, or conflicts.
This week, Russian Urals cargoes from the country’s west were made available to Chinese buyers who usually do not accept such grades, which was one sign of that flexibility.
Russian President Vladimir Putin has demanded that Ukraine give up Crimea, which Russian forces unlawfully annexed in 2014, as well as the eastern Donbas region.
Ukrainian President Volodymyr Zelenskiy would need to order the troops to withdraw from areas of the Luhansk and Donetsk regions still under Kyiv’s control.
After three months of gains, oil prices dropped more than 7% in August, adding to overall pessimism as the peak summer demand season ended. Following OPEC+’s easing measures, investors are preparing for a possible surplus later this year.
Nigeria’s indigenous oil firms are now more active in the upstream sector, as international majors withdraw and stability improves in onshore operations. Increased onshore production and fewer pipeline disruptions are driving the highest average output in over five years, steady at 1.8 million barrels per day in July.
Improved flow to the Ugo Ocha terminal has also led to a significant rise in exports, reaching 65,000 barrels per day recently.
For example, operator Neconde has started using barging to supplement pipeline flows, which has become a common alternative logistics strategy among local players.
Nigeria’s crude oil production surpassed the milestone of 1.8 million barrels per day in July. The country’s oil and gas industry underwent a major restructuring because of the Petroleum Industry Act (PIA) of 2021, which is credited with the recent increase in oil output.
This historic law aimed to reform the industry’s institutional, legal, and regulatory framework, and was finally enacted after decades of debate. It established two new regulatory bodies—the Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA) and the NUPRC for upstream activities replacing a patchwork of outdated legislation.
Dangote is still reliant on Foreign crude
Meanwhile, the Dangote refinery’s crude imports reached 590 kbd in July, the highest monthly volume ever recorded. Interestingly, Nigerian grades, primarily including Amenam, Bonny Light, and Escravos, accounted for only 40% (220 kbd) of the total, while crude from other sources made up a significant 60% (370 kbd).
Nigerian crude supply has surpassed that of other countries due to several factors. WTI has offered more affordable prices than some domestic alternatives, especially as U.S. grades reached multi-month lows and increased OPEC+ output made barrels less attractive in Asia.
However, sourcing domestic crude for the refinery remains a challenge. Since October 2024, Dangote has been able to receive crude paid for in local naira through an agreement with NNPC; however, actual deliveries have consistently fallen short of the committed volumes.
