World oversupply leaves Nigerian crude unsold

Nigerian crude oil sellers are struggling to search out consumers on the worldwide market, even because the Dangote Petroleum Refinery not too long ago cried out over the low provide of the feedstock domestically.

In line with a Reuters report on Thursday, West African crude oil sellers are struggling to search out consumers for as much as December 26- and January-loading cargoes as a consequence of stiff competitors from plentiful and cheaper various provides.

About 20 million barrels of Nigerian oil for December and January loading remained unsold by Thursday, in accordance with two merchants who spoke with Reuters.

This comes because the Dangote refinery not too long ago stated it was importing closely from america, Ghana, and different African international locations as a consequence of a scarcity of enough provide from native oil producers.

In line with the Reuters report, the quantity of unsold Nigerian and Angolan crude, analysts stated, is a symptom of a wider oil market surplus. This drove promoting on the worldwide futures market, pushing Brent crude under $60 per barrel to its lowest degree since Might this week.

“The overhang of West African cargoes partly displays the broader world crude provide surplus rising in Q1,” stated Victoria Grabenwoger of analytics agency Kpler.

It was reported that “roughly 20 million barrels of Nigerian oil for December and January loading remained unsold by Thursday, in accordance with two merchants, whereas Angola’s December-January programmes nonetheless had as many as 5 to 6 cargoes obtainable.”

These cargoes have reportedly slowed the beginning of the buying and selling cycle for February cargoes, although Angola’s loading schedule and time period nominations have already been launched.

The report added that such a lot of unsold oil is uncommon, particularly for the present month, provided that the West African commerce cycle is often nearer to 2 months forward.

Estimates for each international locations’ overhang had been as excessive as 40 million barrels earlier this week. “Present market softness seems to be partly seasonal and partly as a consequence of shifting shopping for patterns in response to freight prices and various provide choices,” stated OilX analyst Francisco Gutierrez, including that Angolan January commerce is 20 per cent behind its long-term common tempo as a result of the world’s largest commodities purchaser, China, has switched to cheaper or nearer various grades.

Provides from the Center East are stated to be displacing medium and heavy West African grades in Asia, as lowered official promoting costs in January, and shorter voyages give these grades a aggressive edge, the analysts had been quoted as saying.

India’s oil imports from Russia have remained resilient regardless of tightening Western sanctions, displacing medium-heavy density West African crudes, whereas light- to medium-density West African grades are struggling to compete with provides from Argentina and Brazil, two merchants said.

“Nigeria has additionally been left to market extra oil due to lowered imports by Africa’s largest oil refinery, the 650,000-barrel-per-day Dangote plant, which can in January bear upkeep,” Kpler’s Grabenwoger stated.

Nonetheless, throughout a media briefing on Sunday, the President of the Dangote Group, Alhaji Aliko Dangote, complained about low crude provide regardless of the home crude provide obligation underneath the Petroleum Business Act. Dangote stated the refinery had been importing crude oil from numerous international locations so as to not run out of feedstock.

Requested if the naira-for-crude deal had solved his problem of low crude provide, he retorted, “We aren’t getting sufficient crude nonetheless; that’s why we purchase from Ghana, we purchase from a number of African international locations, and we purchase from america. The US has been one in all our main suppliers. On common, we don’t purchase lower than 100 million barrels from the US. The US can also be a serious beneficiary of our refinery,” the billionaire businessman stated.

There was friction between the Dangote refinery and the Nigerian Upstream Petroleum Regulatory Fee over the home crude provide obligation.

In June 2024, Dangote’s deputy, Devakumar Edwin, accused worldwide oil corporations of intentionally irritating the refinery’s entry to native crude by promoting above the market costs, forcing it to import crude from america and different international locations.

The refinery additionally accused the NUPRC of failing to implement the home provide obligations. Though the NUPRC defended its actions, the dispute lingered till the Federal Authorities ordered the Nigerian Nationwide Petroleum Firm Restricted to promote crude to Dangote in naira.

The naira-for-crude deal, which started in October 2024, boosted native gas provide, lowered queues and contributed to cost cuts. Dangote subsequently slashed petrol costs from about N1,100 per litre to N875, and later to N739. Nonetheless, he has stated repeatedly that the refinery nonetheless is dependent upon imported crude to maintain its operations working.