Nigeria delays oil export plans

Official selling prices (OSPs) for Nigerian oil, usually issued in the second or third week of each month, had still not been issued on Monday. The global supply deal, agreed by the OPEC+ group of oil producers, is due to go into effect on 1 May.

Traders expect the May OSPs to fall below April’s record lows published by Nigeria National Petroleum Corp. (NNPC).

Traders of Nigerian oil told Reuters that Nigeria, an OPEC member, had revised its May programmes for oil cargoes and would also have to lower its output in June, based on the OPEC+ deal.

“May cargoes will get delayed and new June cargoes may be relatively few,” one of the sources said.

The Organization of the Petroleum Exporting Countries, Russia and other allied producers agreed to cut their combined output by 9.7 million bpd, or each reducing their production by more than 20%. The first round of cuts will run in May and June. Reductions will be less severe after that.

“The NNPC is working out the cuts for the international oil companies, that’s why the programme for June and OSP for May is yet to come out,” another trading source said.

The NNPC, which has not issued any public notice of delays or output cuts, needs to discuss reductions with companies working in the country, including Shell, ExxonMobil, Eni and Chevron.

Brent crude, the benchmark against which Nigerian oil trades on the global market, fell to its lowest in two decades last week before staging a modest recovery. Brent was trading around US$20/bbl on Monday.

Traders said Nigeria’s key crude grade Bonny Light was heard to be offered at as low as dated Brent minus US$5, compared to a premium of US$3 in more normal market conditions.

Surging inventories, as demand for oil has tumbled due to global measures to fight the coronavirus, have made it a challenge for some producers to find buyers for their oil.

At least three dozen Nigerian crude cargoes are still available for export in April and May and the country has minimal domestic storage.

NNPC head Mele Kyari told Nigerian media last week that Nigeria had to cut output because of scarce storage capacity.

In addition, major markets, such as Europe and Asia, spurned West African crude in favour of oil from producers that lie closer to them, cutting down on shipping times amid the market uncertainty and reducing freight costs.

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