Nigeria’s crude oil market showed resilience mid-week, with Bonny Light, Brass River, and Qua Iboe trading at around $71.4 per barrel. The uptick reflects stronger demand from Asian refiners, particularly India, which has increased its purchases as U.S. pressure curtails Russian crude imports. Still, the rally may prove temporary, with OPEC signalling fresh output increases that could weigh on prices in the weeks ahead.
Key Developments
- Nigerian Crude Pricing: Nigeria’s benchmark blends remain attractive, but traders warn that rising global supply could trim premiums, especially if demand growth slows.
- OPEC Strategy: The producer alliance will meet this Sunday to discuss October output. Members are considering new hikes on top of the 2.2 million bpd increase between April and September and the UAE’s additional 300,000 bpd quota. Analysts caution that while the market has absorbed extra supply during the summer peak, winter could bring inventory pressures.
- Global Supply and Inventories: The American Petroleum Institute reported a crude stock build of 622,000 barrels last week, defying expectations of a 2-million-barrel draw. If confirmed by U.S. government data, this could intensify bearish sentiment.
Why It Matters
Crude oil remains Nigeria’s fiscal anchor. Although the Official highlighted that non-oil exports helped the country meet its 2025 revenue targets without additional borrowing, price stability remains essential for budget funding and maintaining foreign reserves. On the supply side, the Nigerian National Petroleum Company (NNPC) reports that tighter security has nearly eliminated pipeline theft, restoring flows once reduced to 30% of capacity.
Outlook
Analysts expect Brent to hover between $70 and 74 per barrel in the near term, with downside risks if OPEC supply outpaces demand. Nigeria is positioned to benefit from India’s shifting energy mix, with exports projected to exceed 2 million barrels per month by year-end. Looking further ahead, regulators forecast production could rise above 2.5 million bpd in 2026, the strongest output since 2005.
