The decline of world’s oil price has affected OPEC member nations including Africa’s largest oil producer Nigeria.
Recent news states that about half of Nigeria cargoes due to be exported in January are still available.
Reuters report that oil prices are at the $50s trough, almost $10 below Nigeria’s benchmark price.
This has made the Nigeria oil differentials versus Brent to be at the lowest since at least 2009 BFO-QUA at 65 cents a barrel, down 80 per cent since May.
Asia has been negotiating between African and Gulf oil producers who, hobbled by bulging global supplies and waning demand, are offering steep discounts to defend their market share in the world’s top net crude buying region.
This competition is being maximized by Asian buyers and if crude stays at $60 per barrel, The world’s second largest oil consumer, China import costs will drop to under $125 billion a year, versus $222 billion in 2013 when crude averaged $110.
This means more problems for producers like Nigeria and Angola who have to cut costs due to plummeting oil prices, are struggling to make inroads into Asia, a Middle Eastern stronghold.
Due to the search for more Asian buyers, India has offered Nigeria a 90-day credit line if it must continue to buy her crude oil.
With the loss of the US market earlier this year, India has replaced it as Nigeria’s biggest buyer of the country’s light crude grade.
The head of Energy Security Division at the National University of Singapore, Philip Andrews-Speed said: “There is competition between West African and Middle East suppliers for the Asian markets, but the Middle East suppliers have the cost advantage”.
Due to the efficient low cost of production by Saudi Arabia, Kuwait and the Emirates, these countries have been able to offer hefty discounts.
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