West African petrol imports experienced a dramatic 56 percent drop in the second quarter, reflecting significant shifts in the region’s fuel market.
Data from Refinitiv Eikon reveals that June loadings from the Amsterdam-Rotterdam-Antwerp hub to West Africa decreased to 629,000 tonnes from 895,000 tonnes in the previous year.
The trend continued into July, with loadings plummeting to 627,000 tonnes, compared to 1.5 million tonnes in the same period last year.
The decline in imports can be attributed to a sharp drop in demand from West Africa, with Nigeria being a notable case as demand for petrol in Nigeria dwindled following the removal of petrol subsidies on May 29.
“The key point is that demand from West Africa is drying up,” stated Refinitiv Lead Oil Analyst Raj Rajendran.
As Nigeria’s petrol demand reportedly fell by 28 percent, onshore petrol stocks in the country surged to 960,000 tonnes, highlighting the nation’s reliance on petrol imports due to inadequate domestic refining capacity.
However, foreign refiners from Russia, the Middle East, and Europe are engaged in fierce competition to increase exports of their refined petrol to Nigeria.
Data shows that the importation of petrol from Russia saw an 84 percent surge last year while data from Argus on Nigeria’s gasoline European trade overview revealed a significant rise in Russian petrol imports to Nigeria, increasing from 3,700 barrels per day in 2022 to 24,000 barrels per day in 2023.
This surge in Russian gasoline flows into West Africa started in January and, while still relatively small at around 800,000 tonnes year-to-date, poses a potential threat to European refiners.
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Historically, North America and West Africa, led by Nigeria, have been the top two destinations for petrol exports from Europe, supporting European refiners’ profit margins. However, as Nigeria removed fuel subsidies and domestic demand plummeted, the dynamics have shifted.
“The steady decline in European refining margins, coupled with increased competition from the Middle East, the United States, and Asia, was briefly reversed after Russia’s invasion of Ukraine led to fears of fuel supply shortages. Despite this reversal, European refiners face pressure due to the reduction in flows following Nigeria’s upheaval in the fuel market. Experts believe that newer Middle Eastern refineries are likely to be the winners in this rapidly evolving scenario.”
As the situation unfolds, benchmark profit margins for gasoline in northwestern Europe have remained steady at around $27 a barrel, supported by demand from North America, disruptions in inland wave levels, and local refinery outages.
Nevertheless, the changing landscape in Nigeria’s fuel market calls for cautious monitoring, as the region’s energy market dynamics continue to shift.
