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Nigerian crude settled at $75.68 per barrel in the last trading session of February amid heightened geopolitical uncertainty.
Oil traders favor Nigerian oil blends due to their prevalence of light oil grades and low sulfur content.
Brass River, Bonny Light, and Qua Iboe—the nation’s key oil blends—are trading above $75 per barrel, approximately $3 higher than the Brent contract, demonstrating this preference.
The White House spat between Ukrainian President Volodymyr Zelenskyy and former U.S. President Donald Trump rattled the crude oil market on Friday.
Brent crude futures ended Friday’s trading session at $72.81 per barrel, down 1.2 percent. West Texas Intermediate (WTI) posted a 0.84 percent decline, closing at $69.76 per barrel.
These major oil benchmarks recorded monthly declines for the first time in three months.
High Geopolitical Uncertainty Disrupts the Energy Market
WTI—the preferred import blend for Dangote Refinery—rallied before a heated on-camera exchange between Trump and Zelenskyy in the Oval Office regarding a potential cease-fire deal in the Russia-Ukraine conflict.
- Trump criticized the Ukrainian president for not showing enough appreciation for U.S. assistance in the conflict with Russia. He claimed Zelenskyy lacked negotiating power and suggested that Ukraine could be in a stronger position if it proposed a rare earth minerals deal.
“You are risking millions of people’s lives,” Trump told Zelenskyy. “You’re gambling with World War 3, and what you’re doing is very disrespectful to this country.”
Following the meeting, Zelenskyy expressed gratitude on the social media platform X, posting: “Thank you, America. Thank you for your support. Thank you for this visit.” He also acknowledged the American people, Congress, and the president, stating, “We are working to bring about the lasting peace that Ukraine needs.”
- Selling pressure on major oil benchmarks increased significantly as concerns about the global economy intensified in response to Trump’s latest tariff threats. He announced via Truth Social on Thursday that he was prepared to impose an additional 10% tariff on China.
- Trump emphasized that fentanyl—primarily entering the U.S. through Canada and Mexico—is manufactured and supplied by China.
The U.S. trade tariffs on China are expected to reduce the competitiveness of Chinese goods, casting a negative outlook on oil consumption, as China is the world’s largest crude oil importer.
Declining Interest in Russian Crude Benefits Nigerian Oil
Brent crude prices drifted lower throughout February after a strong start to the year, initially fueled by a combination of harsh winter conditions and the latest round of U.S. sanctions on Russia’s oil industry, which went further than expected.
- India and China emerged as major buyers of Russian crude following the Russian invasion of Ukraine and the subsequent Western oil embargo. India, the world’s third-largest oil importer, now sources most of its crude from Russia.
- However, Indian imports of Russian crude fell to 11.4 million barrels per day (bpd) in February—a 14 percent decrease from January.
- Indian refiners are avoiding tankers specifically sanctioned by the U.S., increasing the attractiveness of Nigerian crude as cheap Russian barrels disappear from India, which imports more than 80 percent of its daily crude consumption.
Meanwhile, Russia is prioritizing trade with China and redirecting tankers to service the Russia-China Far East route after the U.S. sanctioned dozens of vessels in January.
Evolving Dynamics in Nigeria’s Energy Industry
According to the Nigerian Upstream Petroleum Regulatory Commission (NUPRC), Nigeria’s crude oil production has increased by up to 70% since 2021.
NUPRC Chief Executive Officer Gbenga Komolafe stated that Nigeria’s technical potential output is estimated at 2.2 million barrels per day.
“Nigeria’s enormous oil reserves present a fantastic opportunity for development and economic transformation. Our technical potential is 2.24 million barrels per day, but our current production averages around 1.75 million barrels daily,” Komolafe noted.
- Under the Petroleum Industry Act, Nigerian oil producers—including foreign oil companies—are required to set aside a certain amount of crude for domestic refineries before exporting. However, producers argue that refiners are not offering competitive prices, making compliance challenging.
- Meanwhile, NUPRC recently announced that it would not issue export permits for oil cargoes from producers who fail to meet their specified supply quotas.
- In a statement, the NUPRC reminded oil exploration and production companies of their obligations and the consequences of non-compliance. Dangote Refinery has urged regulators to enforce the law.
Kpler data revealed that Indian imports of Russian crude fell to a two-year low in February due to U.S. sanctions on Russia’s oil trade.