Amid growing geopolitical tensions and global economic worries, Nigeria’s oil futures, Brass River and Qua Iboe, have outperformed Brent crude, the global benchmark, demanding a $4 per barrel premium.
The Qua Iboe, a light sweet crude grade, also increased 1.59% to trade at $81.12 a barrel on Monday, while Brass River, a sweet medium-light oil, climbed 2% to trade at $81.02 per barrel.
ExxonMobil uses various offshore resources to generate Qua Iboe, which it then exports via the Qua Iboe terminal. Refiners frequently use the crude because of its excellent grade and low sulphur level.
By 6 p.m. Nigerian time on Monday, Brent was trading up $1.72, or 2.2%, at $77.34 per barrel, while Nigerian crude futures were $4 higher.
This pricing advantage demonstrates the sustained demand for Nigeria’s lighter, sweet crude, valued for its low sulphur content. Refiners are very interested in it because it can easily be converted into high-end products like petrol and diesel.
“Nigerian oil is one of the most sought-after in the worldwide crude oil business due to its distinctive quality. The low sulphur concentration makes it one of the best in the world,” said Masters Energy Oil and Gas Limited.
Following China’s most recent economic news, which was viewed as negative for oil demand, THE NEWS CHRONICLES found that crude oil prices began to decline at the beginning of the week.
“China is experiencing continuous deflationary pressure due to weak domestic demand. The change in fiscal policy attitude indicated by the press conference yesterday (Saturday) would aid in dealing with such issues,” Zhiwei Zhang, chief economist of Hong Kong-based Pinpoint Asset Management, told Reuters.
The majority of the 2024 decrease was due to China, the world’s largest importer of crude oil, as OPEC reduced its growth estimate for the nation from 650,000 barrels per day (bpd) to 580,000 bpd.
Oil prices should have benefited from the Chinese government’s announcement on Saturday that it would increase economic stimulus.
Beijing did not, however, provide specifics of the magnitude of the stimulus plan, which would include subsidies for low-income people and “significantly increased” debt purchases from local governments.
The precise amount the Chinese government will spend on these further stimulus measures seemed to be the only thing traders were interested in hearing from that report.
As a result, oil traders briefly forgot about the Middle East. They turned their attention back to the biggest oil importer in the world, placing bets that whatever boost it provided would not be sufficient to support the world’s stock and commodity markets.
Relevance to Nigeria
Nigeria, whose economy is largely dependent on oil exports, may be significantly impacted by this move in the oil markets.
“A drop in demand may result in reduced oil prices, which would therefore cut government revenue. This might put strain on the country’s budget, perhaps resulting in cuts to public services and infrastructure spending,” said Aisha Mohammed, an energy analyst with the Lagos-based Centre for Development Studies.
Oil is benchmarked at over $78 a barrel in the 2024 budget. Additionally, Nigeria is predicted to produce a minimum of 1.78 million barrels per day (bpd).
