Nigerian crude has reportedly suffered its slowest sales in August as U.S. exports of competing light, sweet grades flood traditional global markets. But the Nigerian National Petroleum Corporation [NNPC] group managing director, Mele Kolo Kyari, told Reuters that the quality of Nigeria’s products will swerve the market later.
“I think the advantage we have had is the quality of our crude. We know (buyers) will come,” Kolo Kyari said.
Meanwhile, traders say this is bad news for the country as budget estimates were made with every hope on oil earnings.
International observers are saying that US President, Donald Trump, is sure making real his threat to dominate world energy turf and reshape oil markets worldwide. Reports said U.S. oil exports surged 260,000 barrels per day in June to a monthly record of 3.16 million BPD.
Reuters had reported that Nigeria’s crude has largely been pushed out of the U.S. market in the last decade due to booming domestic output. Exports to the United States slid to zero for three weeks in July, the U.S. Energy Information Administration said of the Nigerian crude.
Shale oil from the U.S. Permian basin is pouring ever more into traditional strongholds for Nigerian oil in Western Europe, India and Indonesia, reports say. Both Nigeria and the United States are big producers of the kind of light, sweet grades that are ideal for refining into gasoline.
According to IHS Markit, Europe has imported around 46% of Nigeria’s oil since the beginning of 2019, India nearly 18%, and the rest of Asia about another 10%. “They’re facing bigger competition from the U.S., and in the last few weeks, U.S. exports have really picked up,” one major buyer of West African crude told Reuters.
As many as forty cargoes for export in August were still in need of buyers when Nigeria began publishing its preliminary programme for September exports beginning on Jul. 18. It was the largest oversupply so far in 2019, with about 25 cargoes the monthly norm.
Though the excess has begun to clear, in part due to energy majors absorbing much of the excess into their own refining systems, the discounts sellers made to attract interest has lowered price expectations for Nigerian exports for September. “They’ve got a big volume still remaining, and though the number of cargoes left for August is in the single digits, it seems to be taking longer and longer to clear lately. It’s not a pretty picture,” the crude buyer said.
The fire and explosion on June 21 which shut down the Philadelphia Energy Solutions (PES) refinery – a consistent buyer of Nigerian oil – only added to the marketing challenge.
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