Over the weekend, the Nigerian National Petroleum Corporation (NNPC) slashed the prices of Nigeria's crude oil grades - Bonny Light and Qua Iboe to their lowest points in over a decade.
Over the weekend, the Nigerian National Petroleum Corporation (NNPC) slashed the prices of Nigeria’s crude oil grades — Bonny Light and Qua Iboe to their lowest points in over a decade. According to reports, The decline was due to declining demand for the country’s crude oil in the international market.
The action, according to oil traders, was engendered by the need for the country to join in the fight for market share.
The NNPC in a statement, said it will sell July supplies of Bonny Light crude at 23 cents more than Dated Brent. This, according to oil trading sources, was the smallest differential since 2005 and compares with a 50 cent premium in June and $2.55 a year earlier.
The NNPC also lowered the official selling price for Nigeria’s largest crude oil stream, Qua Iboe, to dated Brent plus 35 cents per barrel, the lowest differential since May 2005.
Hong Sung Ki - a commodities analyst at Samsung Futures Incorporated said: “Nigeria has no choice but to cut their price differential to fight for market share. The US was its key oil buyer in the past but imports have been shrinking with more shale output in an already oversupplied market.”
Also speaking, Kash Kamal - a senior research analyst with Sucden, said: “They’re playing along now, towing the line with other OPEC members to try and capture market share. It’s a really messy situation. Saudi Arabia, with a marginal cost per barrel at around $30 and substantial cash reserves, can afford to stick it out with crude at these levels. But Nigeria needs crude around $115-120 to balance their budget.”