Nigeria’s Crude Cargoes Remain Unsold As Weak Demand Threatens Country’s Export

A new challenge has taken up the Nigeria petroleum sector while the gross cargoes on March 12 remain unsold, highlighting a low demand for the country’s exports.

The merchants said that on March 10, the buyers of these cargoes were still sought, a large part of the April export calendar also available, according to Argus data. Slow sales occur while Nigerian crude brut faces strong competition from cheaper alternatives such as the Aigre-Aigre-Én-œn Kazakh CPC mixture, American WTI and Mediterranean Crudes in Europe, where the refineries’ maintenance season should begin.

The excess offer of alternatives at a competitive price has lowered the value of Nigerian cargoes in April, aggravating the challenges of the largest African oil producer. Industry analysts claim that this is a disturbing trend for Nigeria, whose economy remains strongly dependent on petroleum income to stabilize exchange reserves and finance public spending. The oil sector is already in difficulty with a low flow of oil.

The International Energy Agency (IAI) warned earlier this month that the world supply of oil could exceed the demand of around 600,000 barrels per day (BPD) in 2025, which poses a serious risk of excess supply on the market. These forecasts add to the concerns of Nigeria, as they weaken global demand and the increase in the production of non -OPEC sources threaten to put an additional drop in oil prices.

The Nigeria oil sector has long been limited by issues such as theft, vandalism of pipeline and the drop in investments in upstream projects. However, the low demand challenge is relatively new, noting that the country must rethink its petroleum market strategies. With many of its traditional buyers who turn to alternative suppliers, Nigerian crude has trouble obtaining contracts. The West African country has experienced something similar during COVID-19 when its tanks sailed for months in search of buyers.

Usually, traders consider Nigeria’s crude from Nigeria to historically a strong seller in Europe and Asia, but the influx of competing notes at lower prices requires refiners to look elsewhere. Energy analysts note that market dynamics change and unless Nigeria adapts quickly, the country risks being sidelined.

A major consequence of the current situation is the potential impact on the budgetary stability of Nigeria. Oil sales represent most of the benefits of foreign exchange in Nigeria, and with low demand, the country may find it difficult to achieve income targets. This comes at a time when Nigeria is already struggling with an economic crisis marked by high inflation, a weakened Naira and increasing debt.

The National Bureau of Statistics (NBS) has repeatedly highlighted the vulnerability of the Nigeria economy because of its excessive dependence on oil exports. Experts warn that not to secure buyers for raw cargoes could have a cascade effect on public spending, the stability of exchange rates and broader economic prospects.

In addition, geopolitical factors play a role in the changing oil market. Russia-Ukraine’s ongoing conflict has led to the development of trade flows, European buyers reducing their dependence on Russian crude and supplies oil from alternative suppliers such as the United States and Kazakhstan.

However, given that the Nigeria petroleum industry has been here before and has historically found means to navigate in difficult market conditions, the government and the Nigerian National Petroleum Company (NNPC) have been invited to adopt more aggressive marketing strategies and to explore new buyers, in particular in Asia, where demand remains relatively strong. In addition, the NNPC was invited to accelerate rehabilitation work in refineries because strengthening local refining capacity could help reduce dependence on exports and create more value at national level.