Nigeria’s crude oil market in Europe threatened by rising exports from US

oil

NIGERIA Nigeria oil industry is facing yet another threat to its survival in the form of increased inflow of exports from the United States to its European Market.

This new threat will further dampen the West African oil giant from raising projected revenues which were pegged at Oil being sold at US$70 per barrel.

Reports by Punch Nigeria indicate that the influx of crude oil from the United States is forcing sellers of Nigerian and Mediterranean crudes to discount September-loading cargoes.

S&P Global Platts quoted traders early this month as saying that the spot market for September-loading cargoes from Nigeria had not seen any activity for more than two weeks.

They said would-be buyers in Europe were waiting for offers to fall further, reassured also by the absence of Asian interest.

Of that total, WTI Midland accounted for 414,000 bpd, as limited demand for WTI into Asia pushed more of it into Europe.

The same slowdown in crude buying in Asia has also led to a greater amount of North Sea, Mediterranean and Nigerian oil in Europe, putting prices under further stress.

The flow of US crude represents a significant challenge for sellers of Nigerian crude in particular, given that the country’s mainstay grades, such as Qua Iboe and Bonny Light, have been shunned by the usual big buyers in Asia.

“Sellers are in a looking-for-bids mode…they don’t see any demand at all,” said one market source, referring to Qua Iboe, which has been under-performing due to its higher light end cut.

OPEC’s cautious optimism in July that the global economy was rebounding faster than expected from the coronavirus pandemic has dimmed, quashing any hopes for Nigeria to raise revenue from its oil exports.

OPEC, recently issued its latest oil market forecast, revising down its projection of global demand by almost 100,000 bpd for both 2020 and 2021.

At the same time, non-OPEC supply is expected to increase more than the organisation had previously forecast.

The outlook puts pressure on members of the OPEC+ alliance, in their role as the oil market’s swing producers, to remain disciplined if they want to speed a further recovery in oil prices.

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