The Federal Government has slashed the official selling prices for its crude oil to record lows. Equally important, Nigeria is looking to woo buyers in order to clear a glut of unsold April cargoes.
Consequently, Nigeria may have opened an oil price war between it and other major oil-exporting countries; as the government is offering to sell its crude in April at unusually large discounts. Indeed, Nigeria is battling with an unprecedented excess of crude oil triggered by the coronavirus outbreak. This is in addition to a price war between Saudi Arabia and Russia for market share.
Experts believe the unsold cargoes represented more than 70 per cent of the total oil exports for Nigeria; even as they affirm that the situation puts the country in a very difficult spot.
Group Managing Director, Nigerian National Petroleum Corporation (NNPC), Mallam Mele Kyari; recently disclosed that Nigeria was already struggling to find buyers for its crude oil. Additionally, he revealed that over 50 cargoes were yet to be sold. In fact, the NNPC boss laid the blame for the situation with Nigeria’s crude cargoes at the doorsteps of other OPEC members.
Kyari stated that crude oil from Nigeria had been stranded due to the lower prices offered by countries such as Saudi Arabia and Iraq; noting that these powerful rivals could afford discounts of around $5 to $8 per barrel to buyers.
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As a matter of fact, the Nigerian National Petroleum Corporation had cut its April official selling prices. Specifically, it had cut prices for Bonny Light and Qua Iboe by $5 per barrel; to dated Brent minus $3.29 and minus $3.10 per barrel respectively, according to Reuters.
Meanwhile, Brent crude, the international benchmark, has fallen by over 60 per cent since the start of this year. Specifically, it stood at $26.44 per barrel on Monday night. On the other hand, Bonny Light and Forcados are both higher and due to load 245,000 barrels per day, Bonga 123,000 bpd and Qua Iboe 215,000 bpd.
Indeed, the coronavirus pandemic which has spread around the globe like a wildfire; has hit Nigeria hard, sparking a drastic fall in demand.
