Iran’s return to an already oversupplied oil market appears set to put further pressure on Nigerian crude oil, which has been struggling to sell in recent times.
Industry analysts have said South Africa’s and India’s imports of Nigerian crude could suffer setbacks, as Iranian oil pushes ahead to regain its lost market share.
The United States and European Union at the weekend lifted key sanctions against Iran, removing constraints that had capped its crude exports at just one million barrels per day over the past four years.
Iran’s Deputy Oil Minister, Roknoddin Javadi, on Monday expressed confidence that the country, which has the fourth largest proven oil reserves in the world, can produce an extra 500,000 bpd.
India, which recently replaced the United States as Nigeria’s biggest market, saw its import of Nigerian crude rise to a peak of 20.37 million barrels in April last year.
Before the sanctions, Iran was India’s second-biggest supplier of oil, but occupied the No. 7 spot in the 2014/15 fiscal year as India curbed annual purchases to 220,000 bpd.
South Africa, which imports more Nigerian crude than any other African country, bought 9.45 million barrels in January 2015, according to data from the Nigerian National Petroleum Corporation.
The Head of Energy Research, Ecobank Capital, Mr. Dolapo Oni, in a telephone interview with our correspondent, said, “Nigeria’s crude will continue to face challenges to sell because other grades are now cheaper and also attractive to buyers. The same revenue implication: lower revenue for the government.
“Iran remains a major threat to us in India, and that could affect trade this year. Before now, traders have had issues selling our cargoes.”
The Executive Director, South African Petroleum Industry Association, Avhapfani Tshifularo, was quoted by Bloomberg as saying, “Iranian imports are likely to displace the Nigerian and Saudi Arabian crudes, since they seem to have filled the gap since South Africa stopped importing Iranian crude oil,” he added.
An economist at FocusEconomics, Robert Hill, said, “Iran will want regain market share it has either lost, or never had access to. This will most likely translate into more supply of high-quality hydrocarbons and downside pressure on prices.”