Nigeria’s May Crude Oil Sales Struggle Amid Weak European Demand

Nigeria’s crude oil sales for the month of May are facing significant hurdles as a result of subdued demand from European buyers, signaling a challenging start to the month for one of Africa’s largest oil producers.

Reports from industry insiders suggest that approximately 10 cargoes of Nigeria’s crude oil designated for May loading are still available for purchase.

While this figure represents about a fifth of the country’s total exports for the month, it indicates the sluggish pace at which Nigerian crude is being absorbed by the market.

The slow movement of Nigerian barrels comes against the backdrop of a broader bearish sentiment in the Atlantic Basin crude market.

A surge in U.S. oil exports has weighed down prices, affecting refinery feedstock demand not only in Europe but also in West Africa.

Despite European refineries resuming operations after seasonal maintenance, prices for Nigerian crude as well as other alternatives like Azeri Light and West Texas Intermediate, have struggled to gain traction.

James Davis, director of short-term oil market research at FGE, commented on the situation, noting, “We’ve got much weaker margins so crude demand is taking a hit.”

One of the factors contributing to Nigeria’s lag in crude oil sales is the insistence by sellers on premiums over the Dated Brent benchmark. These premiums, however, proved too high for European refiners, prompting a reassessment of pricing strategies.

Christopher Haines, global crude analyst at Energy Aspects Ltd., explained, “May cargoes were at a premium that didn’t work that well into Europe, but lower offers have seen volumes move.”

While some Nigerian crude grades have become more competitively priced, especially for markets like Asia and the Mediterranean, the overhang of unsold cargoes persists. June and July shipments remain on sale, further complicating the outlook for Nigeria’s oil exports in the coming months.

In contrast, Angola, another major oil-producing nation, has experienced relatively stable sales to China. With less than 10 shipments for June loading seeking buyers out of 37 scheduled, Angola’s medium-to-heavy sweet crude has found more favor with Chinese refiners compared to Nigeria’s lighter output.