Nigeria’s crude trades at $75 despite production struggles

Nigeria’s crude trades at $75 despite production struggles

Nigerian crude oil is trading around $75 per barrel, despite reports that the benchmark crude recently fell below $70 per barrel. Oil production remains fragile, adding economic strain to the country.

Nigeria’s light-sweet crude oil blends, known for their low sulphur content and high light oil grade, continue to be favoured by traders. This preference is reflected in the prices of Nigeria’s key oil blends—Brass River, Bonny Light, and Qua Iboe—which are trading above $74.50 per barrel, surpassing the current Brent crude contract.

Nigeria’s oil output, however, remains inconsistent. According to the Organisation of the Petroleum Exporting Countries (OPEC) September Monthly Oil Market Report, Nigeria’s crude oil production rose slightly from 1.307 million barrels per day in July to 1.352 million barrels per day in August. This increase of 45,000 barrels per day, based on data from the Federal Government (FG), contrasts with the FG’s claims that daily production was nearing 1.6 million barrels per day.

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Earlier this year, Nigeria’s oil production dropped to 1.25 million barrels per day in May, despite the Nigerian National Petroleum Company Limited’s assertion that production was close to 1.7 million barrels per day. OPEC’s data showed a decrease of 30,000 barrels per day, with output falling from 1.28 million barrels per day in April to 1.25 million barrels per day in May.

Global oil prices saw a rebound of over 1% on Wednesday, recovering some losses from the previous day. Concerns about Hurricane Francine potentially disrupting U.S. oil production, the world’s largest producer, outweighed fears of weakening global demand. As of 0704 GMT, Brent crude futures had risen by 84 cents, or 1.2%, to $70.03 per barrel, while U.S. crude futures increased by 81 cents, or 1.2%, to $66.56 per barrel.

On Tuesday, both benchmarks experienced nearly a $3 drop, with Brent hitting its lowest level since December 2021 and West Texas Intermediate (WTI) reaching a low not seen since May 2023. This decline followed OPEC’s revision of its demand forecasts for 2024 and 2025. OPEC’s latest report reduced the global oil demand growth estimate for 2024 from 2.11 million barrels per day (bpd) to 2.03 million bpd and for 2025 from 1.78 million bpd to 1.74 million bpd.

Meanwhile, China’s daily crude oil imports hit a record high last month, although they were still 7% lower than the previous year and 3% below the same period last year, according to customs data and Reuters reports.

Nigeria’s crude trades at $75 despite production struggles