Nigeria’s Oil Exports Face Stiff Competition Amidst Output Decline

SEATTLE (Oil Monster): The nation is facing a double whammy of crude oil production decline and growing competition in the global market, ’FEMI ASU writes.

At a time the global oil benchmark, Brent crude, has increased significantly, Nigeria has suffered a decline in crude oil production, coupled with a rising competition in the global market.

Brent, against which Nigeria’s oil is priced, was hovering around $79 per barrel on Friday, compared to a record low of $27 per barrel in January 2016.

The steep fall in oil prices in 2014 when the international benchmark peaked at $115 per barrel, took a heavy toll on the nation’s economy, which slid into recession in 2016 for the first time in 25 years.

Nigeria relies heavily on earning from oil exports, and the recent production decline constitutes a setback for an economy that is struggling to recover from recession.

The nation’s oil production including condensate fell to 1.83 million barrels per day in May from an average of 2.06 million bpd, according to latest data obtained from the Ministry of Petroleum Resources.

The country suffered the biggest decline in crude oil production in the Organization of Petroleum Exporting Countries in May as its output fell by 114,500 bpd.

OPEC, in its Monthly Oil Market Report for June, put Nigeria’s output at 1.516 million bpd in May, down from 1.63 million in April and 1.861 million bpd in December 2017.

Reuters reported on June 11 that Nigeria’s oil exports were expected to fall in July to just 1.43 million bpd, the lowest level so far this year, according to loading plans.

The export plan comprised 48 cargoes, compared with 60 cargoes and a daily rate of 1.796 million bpd in June, due in part to an outage on the Bonny Light stream, which has been under force majeure since May.

Nigerian crude oil has struggled in the past few months with erratic supply, and with unfavourable arbitrages that have made it more economical for major buyers to take other crudes, including United States’ shale.

Courtesy: www.punchng.com