Oscarline Onwuemenyi 16 January 2015, Sweetcrude, Abuja – With recent reports from the Organisation of Petroleum Exporting Countries, OPEC, about Asian buyers seeking alternatives to Nigerian crude, leading to over 35 million barrels unsold since December, 2014, the American government has come out with reasons it stopped buying the nation’s oil for several months.
Why US stopped buying Nigeria’s oil – White House
The US Economic Council Director, Jeffrey Zients, US Labor Secretary, Thomas Perez, and White House Policy Council Director, Cecelia Munoz, were addressing a few US journalists on Thursday afternoon on the state of the American economy when a question was raised wondering why the US brought oil imports from Nigeria to a complete zero, while still importing oil from Saudi Arabia and other major oil producing countries.
According to the White House Economic Council Director, “Across the last several years, US oil production has ramped up significantly by more than 50 percent to now over eight and a half million barrels per day.”
He explained that such a high turn up in local US oil production “has now dramatically reduced our dependency on imports,” Zients noted, adding that “in fact, we now produce more here than we import.”
The White House official stated that the development is consistent with President Barack Obama’s energy strategy, which has changed “quite a bit over the last few years as we are much less dependent on oil imports.”
That strategy, observers point out, has not only left Nigeria in the lurch, but has generally also driven down the international market price of oil to a ridiculous $60 range by the close of trading on Friday. Oil price, which soared around $100 in September, is now $56.52 for the WTI Crude and $61.38 for the Brent Crude oil.
Asian countries, notably India, China. And Malaysia, which Nigeria turned to when the United States stopped buying Nigeria’s crude oil due to the shale boom, are said to now prefer Angolan grades. This situation has potential to put the Nigerian economy in a bind, analysts say.
But Zients and the other US officials at the press briefing did not address the issue of the ongoing importation from other oil producing nations, including OPEC members like Saudi Arabia and Kuwait and non-OPEC suppliers like Canada. In fact, as at last month, it was reported that, while US completely halted oil imports from Nigeria, it increased its importation from those three countries.
The reduction of US oil importation from Nigeria to zero is the very first time since 1973 that the US did not import oil from Nigeria. US Shale oil production is responsible for the infusion of “light, sweet crude,” said to be similar to Nigeria’s Bonny Light oil, and US refineries are said to have preferred buying the locally produced oil, which is cheaper than Nigeria’s light crude.
Before Zients explanation on Thursday, there have been muted concerns whether the decision to completely end oil importation from Nigeria has any political connotation. For instance, a German top bank, Deutsche Bank had commented last month that “as if the recent drop in oil prices was not enough bad news for Nigeria’s economy, recent data show the US completely stopped importing crude oil from Nigeria. This marks a dramatic reversal for Africa’s largest economy, which in 2010 was still among America’s top 5 oil suppliers and exported at its peak 1.3m barrels per day to the United States.”
The German bank analysis further questioned why Nigeria was singled out, an aspect of the question posed to which the US government officials did not address.
According to Deutsche Bank, the decline in US imports from Nigeria, “proceeded much faster than for the US’ other major suppliers.” It is the rather drastic and complete zero oil imports from Nigeria that suggested a possible political connotation, which was however left unexplained by Zients.
Observers say it is not unlikely that oil imports termination with Nigeria and the refusal of the US government to sell weapons to Nigeria to fight Boko Haram might both be political signals from President Barack Obama to the Nigerian presidency as it can be seen as demonstration of a lack of commitment by the US government to a supposed strategic partner –Nigeria — in Africa.
The Obama administration’s outright refusal to approve the sale of specific military equipment to Nigeria, in a clear-cut public renunciation of the Nigerian military and security apparatus which requested the okay from the US Defense Department is also a potential dampener to US claims of a thriving diplomatic relationship with Nigeria. First, it was the US Ambassador in Nigeria who confirmed that the country would not okay the weapons sales to Nigeria, and then the State Department in response to Nigeria’s Ambassador’s complaints on the issue.
This particular refusal is sending clear indications that there are strong oppositional voices against President Goodluck Jonathan in the White House, the State Department and Pentagon, causing further strain between Nigeria and the American governments, according to knowledgeable US sources.