By Milcah Tanimu
Nigerian oil grades, such as Brass River, Bonny Light, and Qua Iboe, are currently trading at higher prices than the Brent Crude benchmark due to ongoing market developments. Late Tuesday, Brass River and Qua Iboe were priced at around $81.60 per barrel, exceeding Brent Crude, which was trading at approximately $78 per barrel. The recent decline in Brent Crude prices, down by over 1%, was influenced by a decrease in U.S. crude inventories by 846,000 barrels to 425.2 million last week, which has dampened demand expectations.
Libya’s political instability has resulted in significant oil supply disruptions, estimated at between 900,000 and 1 million barrels per day. These disruptions, linked to ongoing control struggles over Libya’s central bank, have impacted global oil prices. Libya’s production was about 1.18 million barrels per day in July, and the situation may influence OPEC+ production plans in the future.
Additionally, Federal Reserve Bank of Atlanta President Raphael Bostic’s indication of potential interest rate cuts next month—due to rising unemployment and lower-than-expected inflation—has contributed to the increase in oil prices.
Nigeria’s oil production rose to 1.41 million barrels per day in the second quarter of 2024, up from 1.22 million barrels per day during the same period last year. This increase has supported a 3.19% growth in GDP for the quarter, compared to 2.98% in the previous quarter. President Bola Tinubu’s economic reforms, aimed at attracting foreign investment and enhancing production, target a 3% growth rate for this year, with hopes to return to a 6% growth rate in the coming years.
The Nigerian National Petroleum Corporation (NNPC) projects that daily oil production could reach about 2 million barrels per day by the end of 2024, despite ongoing challenges and failure to meet OPEC production targets.
Support from oil and gas marketers for the federal government’s directive to sell crude oil to Nigerian refineries in naira highlights their commitment to addressing smuggling and border issues. They advocate for measures to combat smuggling and reduce multiple taxation as crucial steps toward revitalizing Nigeria’s economy.
The premium status of Nigerian oil grades underscores their value amid global supply concerns and shifting market conditions. Focusing on improving local production and addressing smuggling issues will be vital for the stability and growth of Nigeria’s oil sector and overall economy.