Nigerian crude settled at about $70 per barrel, up from $68 earlier in the week. This is because U.S. crude inventories have recently decreased.
Brent crude, which was trading at $69.3 per barrel on September 26, represents a slight monthly increase of 3 per cent.
Nigerian blends usually trade at a slight premium to Brent because Bonny Light has a low sulfur content and a high yield when refined into gasoline and diesel.
Nigerian crude is among the best oil blends for good reason. It’s “sweet” and “light,” making it less expensive and easier to refine into gasoline and diesel.
The “Bonny Light” blend is highly regarded, with an API gravity of 36° and sulfur content below 0.2%. Nigerian crude is a premium blend, often among the priciest crude due to lower emissions and easier refining. Other premium blends include Qua Iboe, Escravos, Brass River, Forcados, and Agbami, all of which originated from the Niger Delta basin. Nigeria ranks 10th in the world with proven reserves of 37.5 billion barrels.
Nigeria’s economic vulnerability to current sub-budget levels is highlighted by Nigeria’s 2025 budget, which assumes an average crude price of $75 per barrel and production of 2.6 million barrels per day (mb/d).
Global tensions
Russia has tightened its export controls by extending limits and reintroducing a complete ban on gasoline. Russia’s Deputy Prime Minister Alexander Novak said on Thursday that Russia will keep partially banning diesel exports for the rest of this year, and the ban on gasoline exports will also be extended.
Some Russian regions are beginning to see a fuel shortage in certain grades due to decreased refining capacity. Concerns about OPEC+ discipline are also rising. OPEC+ has been easing production cuts, leading to an oversupply in the market, with global supply estimated to reach 105.8 mb/d (a 2.7 mb/d increase year-on-year) by 2025. Non-OPEC+ countries will add 1.4 million barrels daily to this growth.
Nigeria exceeded its 1.5 mb/d quota in June and July, but it faces competition from Kazakhstan, which is exporting a record 1.8 mb/d, and U.S. exports. Oil prices have risen to the high end of a two-month trading range amid fears that the U.S. may take a more assertive stance against Russia. Geopolitical concerns have pushed prices close to their two-month high.
Additionally, news has emerged about increased supply or supply potential: oil companies in Iraqi Kurdistan have reached an agreement with the Kurdish regional government and Iraq’s central government, allowing for the immediate resumption of exports from the northern region.
The Iraq-Turkey pipeline has not been used since March 2023 due to disagreements. Fuad Hussein, Iraq’s foreign minister, expressed hope that exports, initially scheduled to restart in a few days at 230,000 barrels per day, will now begin on Saturday. A similar attempt in March failed.
Ongoing geopolitical conflicts in Europe and the Middle East create market uncertainty. The economic impact benefits Nigeria financially in the short term, but domestic fuel prices may rise due to the country’s reliance on imported refined fuel amid worsening economic conditions.
