How low demand forced NNPC to slash price of crude
Ukpono Ukpong, Abuja
Following the decrease in the demand for crude, the Nigerian National Petroleum Corporation (NNPC) has taken steps to entice buyers by slashing the prices of the country’s crude grades.
The low demand is as a result of the closure of many refineries for maintenance.
According to SweetcrudeReports, the price schedule by NNPC showed that the August price premiums for Bonny Light crude has been reduced to 163 cents per barrel from 204 cents in July, adding that the Corporation also crashed the price of Qua Iboe to 157 cents from 215 cents the month before.
Data showed that lower demand for Nigerian crude will affect exports of Bonny Light, Bonga, Qua Iboe and Forcados as the number drops to 878,000 barrels per day (bpd) in September, from 954,000 bpd in August.
Twenty-five to 40 cargoes remain for August loading even as some oil majors is said to be taking in the excess cargoes into their own refining systems.
Top grades such as Qua Iboe and Bonny Light sold for a little over $2.00 above dated Brent as at Friday.
Similarly, the U.S shale oil according to projections will also affect Nigerian oil export especially the light sweet grades due to summer driving season as well as the abundant remains of U.S. grades.
The U.S shale oil is known for its lightness, very low sulphuric content and comes at lower prices which makes triggers its high demand.
Shale oil boom has threatened not just the Nigerian crude varieties, but also other crude grades around the world, forcing prices to crash about four years ago. Prices are yet to fully recover ever since.
Due to low demand, the export of one of Nigeria’s crude varieties, Qua Iboe, is now down from 9 cargoes originally booked for export in September, to 8. Six cargoes were originally ordered for September, plus two left from August.
The programmes for other main grades are still being expected, while 25-35 cargoes remained for August loading.
Top grades like Qua Iboe and Bonny Light were on Thursday offered at around $2-$2.50 above dated Brent.
Nigeria majorly relies on revenue from oil exports to fund its national budget.
This year’s N8.8 trillion budget has been planned on the production of 2.3 million barrels per day at $60 per barrel.
