NIGERIA’S economic woes are mounting further after it emerged that 50 shiploads of Bonny light crude remain unsold at the nation’s export terminals despite India relieving the pressure a little with the purchase of some petroleum earlier this week.
With the global economic lockdown introduced as a result of the coronavirus pandemic, Nigeria’s economy has been hit hard as both oil prices and demand have collapsed dramatically. Unable to sell its daily output of 2.1m barrels a day, Nigeria has resorted to borrowing to fund its 2020 budget, dramatically increasing the nation’s debt profile.
This week, India relieved some of the pressure on Nigeria, purchasing a consignment of crude oil as the global lockdown eases but this only scratched the surface. Nigeria still has about 50 cargoes on unsold crude sitting idle as her oil tankers have been unable to dock anywhere due to the lack of buyers.
One Reuters analyst said: “India provided one of the few outlets for Nigerian oil as East Asian tenders were awarded to crude from elsewhere and a glut builds up. Tenders for sweet crude oil by Thailand’s petrochemical company IRPC and Taiwan’s CPC were not awarded to any West African grades, with the latter taking US oil instead.
“Indian oil firms took in about 5m to 6m barrels of Nigerian crude last week and 2m so far this week, with India’s IOC awarding a tender to Total for Akpo crude and possibly one other cargo. There remain around 50 unsold cargoes of Nigerian crude seeking buyers, with European demand largely non-existent.
“Contango in the global oil market has narrowed recently amid signs India and China are tapping vast amounts of floating storage collecting since demand dried up amid the coronavirus pandemic. Oil majors and trading houses have been offering Middle Eastern and West African oil stored at sea as spot prices strengthened in Asia.”
Over the last week, the price of Nigeria’s Bonny light crude hovered around $35 per barrel, with the Organisation of Petroleum Exporting Countries (Opec) raising hope that the market was heading towards stability. Following a recent engagement with China, which accounts for one-third of the global demand growth, Opec believes crude oil demand will pick up soon.
An Opec spokesman said: “The meeting reflected on the impact of the Covid-19 pandemic on the global economy and oil market, as well as China’s domestic oil market, the rebalancing process of oil supply and demand and China’s solutions for and optimisation of the oil and gas trade system. The meeting also reached a consensus on the importance of energy security and maintaining stability in the energy markets, strengthening collaboration between Opec and China, as well as supporting and promoting the unique importance of multilateralism and globalisation.”