Nigerian crude prices rose on Monday after Ukraine stepped up attacks on Russia, fanning concerns that Russian oil supply could be disrupted, and expectations for a cut in U.S. interest rates buoyed the outlook for global growth and fuel demand.
Nigerian Bonny Light crude oil reached a price of about $70 per barrel as Africa’s leading producer surpassed the quota set by the Organization of Petroleum Exporting Countries (OPEC) and its allies (OPEC+).
Bonny Light crude oil peaked in August at about $75 a barrel before plunging.
Crude oil prices saw a slight recovery after weeks of selling pressure. Brent oil futures increased to $68 per barrel, while West Texas Intermediate (WTI) oil futures increased by 15 cents, or 0,24 percent, to $63.81.
Indian refiners have bought two million barrels of Nigerian crude for delivery in September and October. India is now the largest consumer of cheap Russian oil, accounting for 40% of its total imports—its highest level in 2024. This supply can meet India’s rising oil needs without putting extra pressure on the open energy market.
Nigerian crude grades are ideal for India’s refineries due to their low sulfur content, which could signal the beginning of a long-term partnership between the two countries. However, India will now have to compete with the Dangote Refinery.
Nigeria’s crude oil production averaged 1.5 million barrels per day in July, surpassing its OPEC+ quota of 1.5 million barrels per day for the second consecutive month, according to OPEC’s August Monthly Oil Market Report.
This was attributed to a combination of improved security conditions in the Niger Delta and a slow recovery in upstream investment, which was bolstered by the transfer of assets from foreign oil companies to local oil operators.
Africa’s largest refinery. By the end of this year, the massive refinery will purchase all its crude from the Nigerian market, according to Devakumar Edwin, Dangote Industries vice-president.
This marks a shift from its previous practice of sourcing most of its crude from the US, Brazil, Equatorial Guinea, Angola, and Ghana. After several delays, the 650,000-barrel-per-day refinery, owned by Aliko Dangote, Africa’s richest man and Nigeria’s wealthiest man, began operations in 2024.
The $20 billion refinery, which has a larger capacity than the biggest refineries in Europe, currently produces naphtha, diesel, gasoline, and aviation fuel.
Mixed geopolitical signals complicate Crude Oil Fundamentals
A drone attack by Ukraine on Russia on Sunday caused a massive fire at the Ust-Luga fuel export terminal and a reactor at one of Russia’s largest nuclear power plants to significantly cut its capacity, according to Russian officials.
Additionally, the region’s acting governor reported that a fire at Russia’s Novoshakhtinsk refinery, which was started by a Ukrainian drone strike, had been burning for the fourth day on Sunday. The refinery has an annual capacity of 5 million metric tons of oil, or 100,000 barrels per day, and primarily exports fuel.
However, President Donald Trump reiterated his threats to impose sanctions on Russia if a peaceful resolution to the Ukrainian conflict was not reached within two weeks. Despite the Fed’s signals of a September rate cut, which typically boosts risk appetite, both benchmark prices lack momentum. Most investors are convinced that Trump’s tariffs would have a greater negative impact on economic growth.
Outlook for Crude Oil Market dependent on OPEC, Russia-Ukraine Peace deal
The medium-term outlook remains dominated by downside risks. This year, the eight members of OPEC+ are working to boost supply by nearly 2.5 million barrels per day.
- The reversal of earlier voluntary cuts coincides with a slowdown in demand growth. Forecasters, including the IEA, have warned of the possibility of oversupply into Q4 and, more importantly, 2026.
- However, it’s unlikely to reach record highs as the IEA predicted because high-cost producers and possibly even the participating OPEC+ members might cut output if prices fall significantly below current levels.
- Recent price weakness, driven by the belief that a peace agreement could eventually lift sanctions on Russia and reopen supply routes, has shifted the short-term focus toward US-brokered peace efforts between Russia and Ukraine.
The reality is more complex; any sanctions easing will likely be gradual at best, but market reactions remain sensitive, and prices will respond accordingly.
