- Nigeria Cuts Oil Selling Price to Lure Buyers
Following the surged in global uncertainty and weak demand for Nigerian crude oil, the Federal Government has slashed the Official Selling Price (OSP) of Nigeria’s crude oil to lure buyers as over 70 percent of April cargoes remain unsold.
According to a Reuters report, the nation lowered its OSP last week before releasing its May loading programmes on Monday.
“May loading programmes emerged with key grades seeing a rise over the previous month. Bonny Light and Forcados are both higher and due to load 245,000 barrels per day, Bonga 123,000 bpd and Qua Iboe 215,000 bpd.
“There will also be two cargoes each of Usan and Yoho, five cargoes each of Brass River and Agbami, six of Egina and four Amenam,” the Reuters report stated.
On Friday, the Nigerian National Petroleum Corporation (NNPC) cut its April OSP for Bonny Light and Qua Iboe by $5 per barrel to dated Brent minus $3.29 and minus $3.10 per barrel, respectively.
The nation could not find buyers for about 50 cargoes or 70 percent of April loading despite offering buyers discount. Experts have said buyers prefer Saudi Arabia and Iraq that could afford to offer between $5 to $8 discounts per barrel.
However, with the nation’s economic position declining amid fast-spreading coronavirus, Nigeria was forced to lower its OSP to a record-low to entice buyers and reduce its unprecedented excess of crude oil.
Nigeria’s foreign reserves declined to 29 months low of $35.9 billion this month, down from $45 billion recorded in June 2019 due to the drop in revenue generation caused by low oil prices and the inability to sell the nation’s oil.
All these coupled with weak business sentiment has erased more than 17 percent of the nation’s stock value and compelled the Central Bank of Nigeria to technically devalued the Nigerian Naira from N307/US$1 to N360/US$1 to reflect the changes in macro fundamentals.