A fresh challenge has hit Nigeria’s oil sector as 12 March-loading crude cargoes remain unsold, highlighting weak demand for the country’s exports.
Traders reported that as of 10 March, buyers for these cargoes were still being sought, with much of the April export schedule also available, according to data from Argus. The sluggish sales come as Nigerian crude faces stiff competition from cheaper alternatives such as Kazakh-origin light sour CPC Blend, US WTI, and Mediterranean sweet crudes in Europe, where refinery maintenance season is set to begin.
The oversupply of competitively priced alternatives has pushed down the value of April-loading Nigerian cargoes, compounding the challenges for Africa’s largest oil producer. Industry analysts say this is a worrying trend for Nigeria, whose economy remains heavily dependent on oil revenues to stabilize foreign exchange reserves and fund government expenditures. The oil sector is already struggling with low oil output.
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The International Energy Agency (IEA) warned earlier this month that global oil supply may exceed demand by approximately 600,000 barrels per day (bpd) in 2025, posing a serious risk of oversupply in the market. This forecast adds to Nigeria’s concerns, as weakening global demand and rising production from non-OPEC sources threaten to put further downward pressure on oil prices.
Nigeria’s oil sector has long been constrained by issues such as theft, pipeline vandalism, and declining investments in upstream projects. However, the challenge of weak demand is relatively new, signaling that the country must rethink its oil market strategies. With many of its traditional buyers shifting to alternative suppliers, Nigerian crude is struggling to secure contracts. The West African country experienced something similar during COVID-19 when its tanks sailed for months in search of buyers.
Usually, traders see Nigeria’s crude as historically a strong seller in Europe and Asia, but the influx of competing grades at lower prices is forcing refiners to look elsewhere. Energy analysts note that the market dynamics are shifting, and unless Nigeria adapts quickly, the country risks being sidelined.
One major consequence of the current situation is the potential impact on Nigeria’s fiscal stability. Oil sales account for the bulk of Nigeria’s foreign exchange earnings, and with weak demand, the country may struggle to meet revenue targets. This comes at a time when Nigeria is already grappling with an economic crisis marked by high inflation, a weakening naira, and rising debt.
The National Bureau of Statistics (NBS) has repeatedly highlighted the vulnerability of Nigeria’s economy due to its overreliance on oil exports. Experts warn that failure to secure buyers for crude cargoes could have a cascading effect on government spending, exchange rate stability, and the broader economic outlook.
Furthermore, geopolitical factors are playing a role in the shifting oil market. The ongoing Russia-Ukraine conflict has led to changing trade flows, with European buyers reducing their dependence on Russian crude and instead sourcing oil from alternative suppliers such as the US and Kazakhstan.
However, given that Nigeria’s oil industry has been here before, and has historically found ways to navigate difficult market conditions, the government and Nigerian National Petroleum Company (NNPC) have been advised to adopt more aggressive marketing strategies and explore new buyers, particularly in Asia, where demand remains relatively strong. Additionally, the NNPC has been urged to speed up rehabilitation work at the refineries as strengthening local refining capacity could help reduce dependence on exports and create more value domestically.