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Nigeria seems fully committed to the implementation of its quota
as agreed with OPEC+. According to the country's minister for state
of petroleum, Nigeria's compliance has improved since August.
Production of crude stood close to 1.8 million b/d in October, much
lower than the 1.96 million b/d produced in June, when production
from the new Egina field ramped up. Lagos has been arguing that
Egina barrels should be excluded since condensate is not subject to
OPEC limits.
The country's grades remain popular, with the export programme
for December already down to its last cargoes, as the global market
remains quite thirsty for both lighter and heavier Nigerian
barrels. Improved demand has been supported by robust gasoline
cracks and price increases in competing grades. Demand for West
Africa's few heavy sour grades is quite strong as shipping hubs get
prepared for 2020. Prices for Bonga and Egina reached record highs
as refiners target grades producing more low-sulphur fuels.
Meanwhile, China has been importing more crude oil from West
Africa, but primarily Angola, with flows having reached 1.48
million b/d according to IHS Markit Commodities at Sea.
In total, Asia has been importing around 2.4 million b/d of West
African crude oil so far in 2019. India and the rest of Asia have
been absorbing more during the last couple of months, while flows
to North West Europe remain strong.
In parallel to the production cuts and the decreasing flows from
Saudi Arabia to the rest of Asia (excluding China), the continent
had to rely more on alternative suppliers, with West Africa having
partially filled the gap after Venezuela's collapse. Asia's
appetite for West African grades has also been supported by oil
prices, with Middle Eastern oil having become relatively more
expensive compared to other grades.
Posted 04 December 2019 by Fotios Katsoulas, Liquid Bulk Principal Analyst, Maritime & Trade
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