The crisis in the global oil market seems to be hitting Nigeria harder since the country’s economy is largely dependent on crude oil proceeds. To make matters worse, it has become more difficult to sell the oil, even at ridiculously low rates.
Late on Monday, Nigeria released the prices for most of its crude oil grades for sale in May. These prices reflect an urgent need to offload cargoes in the midst of piled up inventory of unsold crude oil, in a highly competitive market right now.
However, even with the discounted prices of $10 a barrel or less, the oil traders are still pessimistic, as they believe that enough buyers might not be tempted to buy crude oil if the market situation does not improve due to the demand collapse triggered by the coronavirus disease.
Nigeria, which mostly sells light crudes that are low in sulfur, lacks the space to store unsold crude. This situation is not helped by the high cost of hiring ships for supplies since many tankers are being used as floating storage.
According to Bloomberg, two Nigerian crude oil grades, Bonny Light and Qua Iboe, will be selling at discounts of $3.95 and $3.92 respectively to dated Brent crude in May.
It was even reported that in the thick of the market crisis in April, with the low demand and storage crisis, some of the Nigerian crude oil grades was sold at a discount of about $5 per barrel. Some of the analysts believe that the very low prices might still not be enough for the country to sell its excess cargoes, as about 30 out of the 65 May loading cargoes are still unsold.
The oil market has been so negatively impacted by the coronavirus pandemic, that about 35 million barrels a day of crude oil demand have been lost. Even the output cuts by OPEC+ and top oil-producing countries have not stopped the slide in the global oil market.