Respite is coming the way of Nigeria which has been battling with the double crisis of falling oil price occasioned in main by the pandemic and OPEC agreed cut in oil production as the country is expected to export its highest oil level ever to China in June.
According to Viktor Katona, an expert at the Russian International Affairs Council, Moscow, Nigeria can finally let off a brief sigh of relief as the return of China has boosted both export prospects and grade differentials.
“Nigerian cargoes arriving in China in June will mark the highest-ever level, whilst West African exports to China will be the highest since November 2018.
”Chinese buyers which would generally buy between 1-2 cargoes from Nigeria yet boosted by the economic profitability of West African countries in April there were 4 vessels sailing off for China and the May 2020 tally went even further to a whopping 7 cargoes, totaling 9 MMbbls,” he said in an article for Oilprice.
He, however, warned that the worst is not yet over.
“Nigeria’s way forward will not be easy – its export possibilities will be subdued for a couple of months by its participation in OPEC+, all its differentials will not go back to pre-corona territory that easily. This will be especially true of high-gasoline-yield very light grades, whilst grades with a more balanced mid-distillate yield should become the best performers of this summer. Nigerian exporters would also need to keep in mind the risk of increased competition – to name just one example, the Indian refiner IOC has awarded in a recent purchase tender in May to the American WTI although almost everyone expected it to buy Nigerian oil,” he warned.
Recall that Nigeria’s economy is about 97% dependent on external earnings from crude oil. The country has been grappling with an economic crisis associated with falling crude earnings occasioned by the COVID 19 pandemic and glut in global storage capabilities.
