MARKET NEWS

Nigeria’s premium crude oil grades are trading above $65 per barrel as global oil prices hold steady despite the Organisation of the Petroleum Exporting Countries (OPEC) agreeing to a gradual increase in production starting October 2024.

The OPEC+ alliance, in its latest meeting, announced plans to raise output by 500,000 barrels per day (bpd) to stabilise markets amid fluctuating demand. However, Nigeria’s key grades—Bonny Light, Forcados, and Qua Iboe—remain in strong demand, selling at a premium to the global Brent benchmark.

Strong Demand for Nigerian Crude

Industry reports indicate that Nigeria’s crude oil grades are currently fetching between $65 to $68 per barrel, supported by steady buying interest from European and Asian refiners. Analysts attribute this resilience to Nigeria’s improved production levels and the high quality of its low-sulfur crude, which is preferred for refining into cleaner fuels.

“Despite OPEC’s decision to increase supply, Nigeria’s crude remains competitive due to its favorable refining properties,” said Kelvin Adegbite, oil market analyst. “Buyers are willing to pay a premium for Nigerian grades, especially as global energy demand remains strong.”

OPEC+ Output Hike and Market Impact

OPEC and its allies, led by Saudi Arabia and Russia, agreed to a modest production increase to avoid oversupply while keeping prices stable. The move comes as global economic uncertainties, including slower growth in China and Europe, weigh on oil demand forecasts.

Oil prices fell to a four-year low in April below $60 per barrel after OPEC+ announced a bigger-than-expected production boost for May, and as U.S. President Donald Trump’s tariffs raised concerns of global economic weakness.

OPEC+ sources have said Saudi Arabia is pushing OPEC+ to accelerate the unwinding of earlier output cuts to punish fellow members Iraq and Kazakhstan for poor compliance with their production quotas.

The hikes also follow calls from Trump on OPEC+ to raise output. Trump will visit Saudi Arabia later in May.

In December, eight OPEC+ countries that have been implementing the group’s most recent output cut of 2.2 million bpd agreed to gradually phase it out in monthly increases of about 138,000 bpd from April 2025.

The June increase from the eight will take the total combined hike for April, May and June to 960,000 bpd, representing a 44 percent unwinding of the 2.2 million bpd cut, according to Reuters calculations.

Brent crude futures lost more than 1 per cent on Friday to $61.29 a barrel as traders braced for more oil from OPEC+.

Oil prices will fall on Monday due to the OPEC+ news amid trade tensions and concerns about economic growth, said UBS’s analyst Giovanni Staunovo.

“We continue to call this a ‘managed’ unwind of cuts and not a fight for market share”, he said.

After his participation, Kuwait’s oil minister said the OPEC+ meeting on Saturday would significantly affect production policy formulation in the coming period.

Reuters reported this week that officials from Saudi Arabia, the de facto leader of OPEC+, have briefed allies and industry officials that they are unwilling to prop up oil markets with further supply cuts.

“Compliance again appears to be the key focus, with Kazakhstan and Iraq continuing to miss their compensation targets, alongside Russia to a lesser extent,” said Helima Croft of RBC Capital Markets.

Kazakhstan defied OPEC+ this month when its energy minister said he would prioritise national interests over those of the OPEC+ group when deciding on oil production levels. Kazakhstan’s April oil output exceeded its OPEC+ quota despite a 3 percent fall.

OPEC+, which includes the Organisation of the Petroleum Exporting Countries and allies such as Russia, is still cutting output by almost 5 million bpd and many of the cuts are due to remain in place until the end of 2026. The group plans to hold a full ministerial meeting on May 28.

Nigeria, which has struggled with production challenges in recent years, has been working to ramp up output to meet its OPEC quota. Recent efforts to curb oil theft and pipeline vandalism have helped boost production to around 1.4 million barrels per day (bpd), up from below 1 million bpd in 2022.