Nigerian crude oil, once trading steadily above $70 a barrel, slipped this week as global supply signals rattled the market.
The decline came after OPEC+ indicated it would modestly raise output in November, while Iraq’s northern oil exports—halted for years—resumed over the weekend, stoking fears of oversupply.
Bonny Light, Nigeria’s flagship crude, was seen hovering near $69 a barrel at the start of the week.
The drop underlined investor anxieties over a market already struggling to absorb volumes, despite resilient demand in parts of Asia and the Middle East.
The shift coincided with reports that the eight OPEC+ nations that voluntarily cut production earlier in the year could unwind portions of those curbs next month.
Analysts say the move reflects the cartel’s bid to claw back market share, even at the risk of eroding the fragile price stability it has worked to maintain.
Supply Pressures Mount Amid Global Shifts
The restart of northern Iraqi exports via Turkey added to the glut, with flows estimated at 150,000 to 160,000 barrels per day after a hiatus lasting up to five years. At the same time, Russia, despite heavy U.S. sanctions, ramped crude shipments to their highest level in 16 months, further complicating the supply outlook.
For Nigeria, the timing is delicate. The Nigerian National Petroleum Company (NNPC) has doubled down on its supply commitment to the $20 billion Dangote Refinery, which began operations in January 2024.
Under a two-year agreement extended earlier this year, NNPC will provide five cargoes of crude each month in September and October, translating to around 300,000 barrels per day. The arrangement is intended to reduce Nigeria’s dependency on fuel imports and stabilize pump prices.
NNPC data shows that since October 2024, the company has supplied 82 million barrels to the refinery—owned by Africa’s richest man, Aliko Dangote—with 60 percent of those paid for in naira. Officials describe the supply deal as a pilot project that could eventually expand to other domestic refiners.
At full capacity, the Dangote plant is expected to process 650,000 barrels per day, potentially ending crude imports altogether by year’s end.
Market Signals Turn Bearish
Despite these domestic strides, global price indicators remain fragile. West Texas Intermediate (WTI) closed at $62.58 per barrel, down 1.38 percent on the day, 3.18 percent over the month, and more than 10 percent year-on-year.
The benchmark has been range-bound between $61.87 and $65.40, with traders watching closely as moving averages converge around $64—a sign that consolidation or a breakout could be imminent.
Citigroup analysts recently projected oil could sink to $60 a barrel before year-end, citing slowing demand in some regions and oversupply pressures. Although OPEC+’s production hike was limited—around 137,000 barrels per day—the symbolism of easing curbs was enough to weaken bullish sentiment.
Meanwhile, Asia’s refiners are playing a bigger role in shaping flows. The region has been absorbing higher volumes of U.S. crude, forcing Middle Eastern producers to cut prices to stay competitive.
China may still purchase extra barrels for its strategic reserves, but refiners there are constrained by maintenance schedules and import quota limits set by Beijing.
