The Nigerian National Petroleum Corporation (NNPC) has cut down the price of every type of crude oil it sells in an effort to regain share of the global oil market amidst continued supply glut and growing competition.
This is coming two weeks after Saudi Arabia, the world’s largest crude exporter, cut the prices for November oil sales to Asia and Northwest Europe, and for most grades to other regions.
The NNPC lowered its official selling prices by at least $1 per barrel for 20 out of 26 oil grades according to new pricing lists.
Qua Iboe, Nigeria’s largest export crude under normal circumstances, was reduced by the most since 2014.
The NNPC cut the selling price of Qua Iboe for November to a 17 cent premium to the benchmark Dated Brent, according to the price list, from $1.07. It reduced the price of Bonny Light to a seven cent premium and Forcados to a 41 cent discount to Dated Brent.
The Group General Manager for the oil-marketing division of the NNPC, MeleKyari, was quoted to have said that the price reductions were due to a “huge cargo overhang” as the country attempts to regain market share.
Like every other producer country, Nigeria is grappling with prices that are less than half of what they were in July 2014.
Shipments are gradually resuming, and lower prices are seen as a sign that Nigeria is seeking to become more competitive in an already oversupplied global market.
“It is a bearish signal for the light, sweet market,” the Principal Consultant at KBC Process Technology Limited, EshanUl-Haq, said in an e-mail, referencing the types of crude Nigeria mostly pumps, adding, “In order to capture a higher share of the market, official selling prices have to come down.”
Brent crude futures slumped as much as 2.7 per cent to $51.27 a barrel, the largest intraday decline since September 27.
Five companies that market the Nigeria’s crude have raised the issue of high official selling prices, Kyari said earlier this week. He said on Thursday that the pricing decisions were unrelated to those “complaints.”
The changes to November prices have brought them back to accurate market levels, according to a survey of four buyers of West African crude after the numbers were published.
The reductions take place as the Organisation of Petroleum Exporting Countries (OPEC), of which Nigeria is a member, attempts to cut its combined output to 32.5 million to 33 million barrels per day in an effort to steady oil markets.