The Minister of State, Petroleum Resources, Chief Timipre Sylva, on Wednesday said the Federal Government will comply with the rules of the Organisation of Petroleum Exporting Countries (OPEC).
“It is not every day,” he said when asked about current overproduction. “We are team players. We will do what OPEC asks,” he told Reuters.
Meanwhile, Californian refineries began loading up on Nigerian oil – taking cargoes of Qua Iboe, Bonga, Erha, Forcados and others, according to traders and Refinitiv Eikon data.
Marathon Oil at its Long Beach refinery has been the most consistent buyer, with another very large crude carrier (VLCC) full of Forcados oil departing Nigeria on Thursday.
Traders said a combination of market factors – including the difficulty and expense of getting U.S. crude oil to the West Coast – made Nigerian grades attractive.
“It makes more cost sense. Even if U.S. crude is closer on the map, when you factor in the price and availability of taking in barrels from Louisiana or Nigeria, Nigeria came out cheaper,” one seller of West African oil said.
The purchases are a rare glimmer of hope this year for Nigerian oil, which now competes with U.S. shale for buyers, including in its top outlet, India.
The United States had historically been a heavy importer of crude oil, but shale production, coupled with the lifting of a four-decade export ban, transformed it into a net exporter of oil and fuels by late last year.
Barrels from this U.S. oil bonanza sailing to domestic shores face added costs, however, due to a century-old law called the Jones Act, which mandates that only U.S.-flagged vessels can transport it.
The restriction often makes freight within the United States more costly than much longer journeys.
But traders warn the surprise opening of the West Africa-West Coast export window, or arb, could be short-lived due to the timescales and distance involved.
“The arb may be already shutting. The price factors which made a cargo exporting today look like a good deal would have been happening over a month ago when the deal was made,” a major buyer of West African oil said.
“They won’t be the same today and certainly won’t be the same over a month from now when the cargo arrives.”
The need to refine oil into low-sulphur shipping fuels in time for stricter environmental rules on Jan. 1 may also have lured those cargoes, as West Africa is home to the kinds of crude most suited to such products. This boon could be fleeting too.
“The honeymoon will be over in a year from now,” said Ehsan Ul-Haq, lead analyst with Refinitiv.
“At present, all refiners are desperate to produce marine gasoil or very low-sulphur fuel oil. Once the market reaches equilibrium … there will be less interest.”
Prince Abdulaziz said the pillars of Saudi Arabia’s policy would not change and a global deal to cut oil production by 1.2 million barrels per day would survive.
He added that the so-called OPEC+ alliance between OPEC and non-member countries including Russia was staying for the long term.
Russia’s oil output in August exceeded its quota under the OPEC+ agreements.
OPEC oil output in August rose for the first month this year as higher supply from Iraq and Nigeria outweighed restraint by Saudi Arabia and losses caused by U.S. sanctions on Iran.
On Sunday, the United Arab Emirates’ energy minister Suhail al-Mazrouei said OPEC and non-OPEC producers were “committed” to achieving oil market balance.
The OPEC+ deal’s joint ministerial monitoring committee meets on Thursday in Abu Dhabi.
Trade and geopolitical tensions are affecting the market, Mazrouei said.
Executives at the annual Asia Pacific Petroleum Conference said on Monday they expect oil prices this year to be pressured by uncertainties surrounding the global economy, the U.S.-China trade war and increasing U.S. supplies.
Elsewhere, China’s crude oil imports gained about 3% in August from a month earlier, customs data showed on Sunday, buoyed by a recovery in refining margins despite a persistent surplus of oil products and tepid demand.
The United States is “very concerned” about China’s purchases of Iranian oil, Dan Brouillette, deputy secretary of the U.S. Department of Energy, said on Monday.
The United States last year withdrew from a nuclear deal that world powers had done with Iran in 2015, and reimposed sanctions to strangle Iran’s vital oil trade
