Nigeria’s oil futures, Brass River and Qua Iboe, have surpassed the global benchmark, Brent crude, commanding a premium of $4 per barrel amid escalating geopolitical tensions and global economic uncertainties.
On Monday, Brass River, a sweet medium light crude, gained two percent to trade at $81.02 per barrel, while the Qua Iboe, a light sweet crude grade, also gained 1.59 percent to trade at $81.12 per barrel.
ExxonMobil produces Qua Iboe from numerous offshore fields and exports through the Qua Iboe terminal. The crude is known for its high quality and low sulfur content, making it a popular choice for refiners.
Nigerian crude futures were $4 higher than Brent, which traded at $1.72 or 2.2 percent at $77.34 per barrel by 6.pm Nigerian time on Monday.
This price advantage underscores the continued demand for Nigeria’s lighter, sweet crude, which is prized for its low sulfur content. The ease with which it can be refined into premium products like petrol and diesel makes it highly sought after by refiners.
Read also: Nigeria crude oil grades sell above $80 amid geopolitical tension
“Nigerian oil is one of the most sought-after in the global crude oil industry due to its unique quality. The low sulfur content makes it one of the finest worldwide,” noted Masters Energy Oil and Gas Limited.
BusinessDay findings showed crude oil prices started falling at the start of the week following the latest economic news from China, which was interpreted as bearish for oil demand.
“China faces persistent deflationary pressure due to weak domestic demand. The change of fiscal policy stance as indicated by the press conference yesterday (Saturday) would help to deal with such problems,” Zhiwei Zhang, chief economist of Hong Kong-based Pinpoint Asset Management told Reuters.
China, the world’s largest crude oil importer, accounted for the bulk of the 2024 downgrade as OPEC trimmed its growth forecast for the country to 580,000 barrels per day (bpd) from 650,000 bpd.
On Saturday, the Chinese government announced it would be injecting further stimulus into the economy, which should have been positive for oil prices.
Read also: Nigeria’s exports rises by 201% in one year as crude oil dominates
However, Beijing did not elaborate on the size of the stimulus package, which would be in the form of ‘significantly increased’ debt buying from local governments and subsidies to low-income households.
Apparently, the only thing traders wanted to hear from that update was exactly how much the Chinese government would spend on these additional stimulus measures.
As a result, oil traders forgot about the Middle East temporarily and focused on the world’s largest oil importer yet again, betting that whatever stimulus it offers would not be enough to prop up global stock and commodity markets.
Implication for Nigeria
This development in oil markets could have significant implications for Nigeria, whose economy is heavily reliant on oil exports.
“A decline in demand could translate to lower oil prices and consequently reduce government’s revenue. This could put pressure on the country’s budget and potentially lead to cuts in public services and infrastructure spending,” said Aisha Mohammed, an energy analyst at the Lagos-based Center for Development Studies.
The 2024 budget benchmarks oil above $78 per barrel. It also assumes that Nigeria will produce at least 1.78 million barrels per day (bpd).
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