Lagos — Nigeria’s Bonny Light and other light sweet crude oil grades across the world are facing challenges in the international market as they are no longer appealing to buyers.
According to findings, while all other crude oil types are also facing challenging times finding buyers, light and medium sweet grades are the least in demand – implying a gloomy economic outlook for countries like Nigeria, Azerbaijan and Kazakhstan, which produce such grades.
Light crude grades with low density and sulphur are the preferred brand by marketers. But now, given that they are hard to store for long period of time, they have lost favour with buyers in the face of low oil demand and market overhang that had necessitated prolonged storage.
Also, light crude grades are mostly used to make naphtha, gasoline and jet fuel, refined products that are both out of favour due to the coronavirus pandemic and the low demand it had orchestrated.
While gasoline and jet fuel do not store for long due to their high quality, seasonality and additives, diesel, fuel oil and heavy crude can be stored in tanks for years.
In a sign of the low demand for light, sweet grades, Nigeria last week slashed its official crude selling prices. The Nigerian National Petroleum Corporation, NNPC, cut April official selling prices, OSP, for Bonny Light and Qua Iboe by $5 a barrel to dated Brent minus $3.29 and minus $3.10 per barrel, respectively.
Azeri Light, also last week, was priced at about 50 cents below dated Brent. Forties, a North Sea light sour oil, has fallen to $1.65 a barrel below dated Brent.
Algeria’s light, sweet Saharan Blend and Kazakhstan’s light sour grade, CPC Blend, were trading at eight-year lows with discounts of $2 and $4 to the price of Brent respectively.