THE glut of crude oil supply in the oil market hit Nigeria’s crude oil exports with poor sales, amidst efforts to balance the market, the International Energy Agency, IEA, on Friday announced a global decline in oil demand growth.
The global energy agency lowered its oil demand growth for 2019 by 100,000 barrels per day to 1.1 million barrels per day and cut its 2020 demand growth to 1.3 million barrels per day blaming uncertainties on the US-China trade war.
“The situation is becoming even more uncertain … global oil demand growth has been very sluggish in the first half of 2019,” the IEA stated in its monthly report.
The IEA highlights that the global oil supply decline poses danger to demand growth of the market.
“Comparing oil demand for May with the same month in 2018, global demand fell by 160,000 barrels per day, for the second year in a row. The outlook is fragile with a greater likelihood of a downward revision than an upward one,” the IEA noted.
However, over forty cargoes of crude oil exports from Nigeria in August were still in need of buyers when Nigeria began publishing its preliminary programme for September exports beginning on July 18 according to a report.
It is the largest oversupply of Nigeria’s crude oil in 2019 considering the time under review when compared to its highest 25 cargoes monthly excess this year.
Nigeria and the United States are major producers of sweet grades crude oil which is ideal for refining into petrol, but US oil exports increased from 260,000 barrels per day in June to a monthly record of 3.16 million barrels per day putting Nigeria’s oil exports sales in jeopardy.
Mele Kyari, the Group Managing Director of the Nigerian National Petroleum Corporation, NNPC, in an interview, affirmed that buyers would always pick interest in Nigeria’s crude because of its quality.
“I think the advantage we’ve had is the quality of our crude, there will always be a need for it,” he said.
According to IHS Markit, Europe has imported around 46 per cent of Nigeria’s oil since the beginning of 2019, India nearly 18 per cent, and the rest of Asia about another 10 per cent.
The Organisation of Petroleum Exporting Countries, OPEC, and its allies have agreed to cut production by 1.2 million barrels per day through to the end of the first quarter of 2020 and its members have shown strong compliance.
However, the IEA was also quick to point out it would be a “temporary phenomenon” because its forecasts show very strong non-OPEC oil production growth next year likely to make the global oil market flooded with crude oil.
Amos Abba is a journalist with the International Center for Investigative Reporting, ICIR, who believes that courageous investigative reporting is the key to social justice and accountability in the society.