When will Nigeria’s unsold crude head for China?

China’s biggest oil suppliers are the Middle East, Russia and West Africa but the United States has also become an important global supplier since it opened up its market for exports in 2016. Right now, Chinese oil importers are shying away from buying US crude as they fear Beijing might soon exclude the commodity from its tariff list in a trade dispute between the two countries.

Not a single tanker has loaded crude oil from the United States bound for China since the start of August, Thomson Reuters Eikon ship tracking data showed, compared with about 300,000 barrels per day (bpd) in June and July.

It takes an average of 6 months for crude imports from US to arrive China so the impact of the Asian country’s stoppage of oil imports from Trump’s country may not be reflecting in the market fundamentals now.  Otherwise, there should be some impact on Nigeria’s loading programme now.

Current loading programmes for Nigeria’s largest streams show an overhang of some 30 cargoes persisted from an originally planned 59 cargoes. Nigerian differentials has fallen enough to whittle down an overhang of unsold cargoes. Forcados and Bonny Light were offered at the same levels around $1.30 above dated Brent and $1.10 – 1.20 a barrel,

October loading programmes for Bonny Light, Qua Iboe and Forcados show Qua Iboe will be down sharply at 183,000 bpd down from 253,000 bpd in September. Bonny Light crude exports were set at 153,226 barrels per day (bpd) for October on five cargoes, in line with September. Exports of Forcados crude oil set at 208,161 bpd for October on nine cargoes of different sizes, down slightly from September. The Bonga schedule has six cargoes for October.

Can China snap these Nigeria’s crude overhang to replace US oil? As the face-off with US intensifies, China has been turning to the Middle East, West Africa and Latin America, according to shipping data and traders but how much of that extra demand is coming to Nigeria cannot be determined at this point.

Last year, China imported an average of 1.48 million barrels a day from West Africa mainly from Angola and Nigeria.

FRANK UZUEGBUNAM