24 April 2018, Sweetcrude, Lagos – Crude oil grades from Nigeria, Russia and other countries are struggling to find buyers as a result of the influx of U.S. shale oil into Europe.
According to a report by Reuters quoting trading sources, U.S. shale producers are now taking advantage of rise in oil prices to flood Europe’s markets with their cheaper products, making it hard for crude grades from Nigeria, Russia, and other oil countries to find buyers.
In a bid to clear glut from the international market and boost prices, the Organisation of the Petroleum Exporting Countries, OPEC, and non-OPEC producers, led by Russia, last year jointly reduced production by 1.8 million barrels per day (bpd), a deal which has since recorded a 149 percent success, helping in rebalancing the market and pushing benchmark Brent prices close to a four-year high.
“U.S. oil is on offer everywhere,” said a trader with a Mediterranean refiner, who regularly buys Russian and Caspian Sea crude and has recently started purchasing U.S. oil. “It puts local grades under a lot of pressure.”
U.S. oil output is expected to hit 10.7 million bpd this year, rivaling that of top producers Russia and Saudi Arabia.
In April, U.S. supplies to Europe are set to reach an all-time high of roughly 550,000 bpd (around 2.2 million tonnes), according to the Thomson Reuters Eikon trade flows monitor.
In January-April, U.S. supplies went from four-fold year-on-year to 6.8 million tonnes, or 68 large Aframax tankers, according to the same data.
Trade sources said U.S. flows to Europe would keep rising, with U.S. barrels increasingly finding homes in foreign refineries, often at the expense of oil from OPEC or Russia.
In 2017, Europe took roughly 7 percent of U.S. crude exports, Reuters data showed, but the proportion has already risen to roughly 12 percent this year.
Top destinations include Britain, Italy and the Netherlands, with traders pointing to large imports by BP, Exxon Mobil, and Valero.
Polish refiners PKN Orlen and Grupa Lotos and Norway’s Statoil are sampling U.S. grades, while other new buyers are likely, David Wech of Vienna-based JBC Energy consultancy said.
“There are a number of customers who still may test U.S. crude oil,” Wech said.
U.S President, Donald Trump had on Friday, accused OPEC of “artificially” boosting oil prices.
“Looks like OPEC is at it again. With record amounts of Oil all over the place, including the fully loaded ships at sea. Oil prices are artificially Very High! No good and will not be accepted!” Trump wrote on Twitter.