Demand from Europe and India for Nigerian crude oil dropped on Wednesday as Benchmark Brent oil climbed above $100 a barrel after Saudi Arabia suggested this week that OPEC could consider cutting output in response to poor liquidity in the crude futures market and fears about a global economic downturn.
Oil price have shaved around $3 a barrel off the value of some types of Nigerian crude.
Oil traders awaited the release of Nigeria’s September official selling prices as export plans for some crude grades emerged and lower demand continued to weigh on offer prices.
Official selling prices were yet to be released by the Nigerian National Petroleum Corporation Ltd, as traders waited to see whether a recent retreat in sale prices would be reflected in the values.
Lower refining margins and softening demand from Europe and India have shaved around $3 a barrel off the value of some types of Nigerian crude.
ExxonMobil last offered a cargo of September-loading Qua Iboe for dated Brent plus $6.50 a barrel, down from nearly dated Brent plus $10 a barrel this time last month.
Nigeria’s Akpo and Amenam streams are due to load two cargoes each, while Agbami will load four.
Contracts for both crudes soared on Tuesday and touched three-week highs on Wednesday after Saudi Energy Minister Prince Abdulaziz bin Salman flagged the possibility of cutting production.
Sources at the Organization of the Petroleum Exporting Countries (OPEC) later told Reuters that any cuts by the producer group and its allies, known collectively as OPEC+, are likely to coincide with a return of Iranian oil to the market should Tehran secure a nuclear deal with world powers.
A U.S. official on Monday said that Iran had dropped some of its main demands in negotiations to resurrect a deal to rein in Tehran’s nuclear programme.
OPEC+ is already producing 2.9 million barrels per day less than its target, sources said, complicating any decision on cuts or how to calculate the baseline for an output reduction.”The oil price and supply outlook suggest that an OPEC+ cut is not currently warranted,” PVM analyst Stephen Brennock said.
“Global oil supply could take a hit as peak U.S. hurricane season approaches. Elsewhere, future supply outages in Libya cannot be discounted while Nigeria’s oil fortunes show little sign of improving.”