Nigeria’s oil revenue may be up for some potential threat as the country has been hit by a reduction in the demand of its crude oil following a reduction of importation by India.
India which is Nigeria’s largest crude oil importer is said to have reduced its imports by $39.5bn in April according to data from the country’s Petroleum Planning & Analysis Cell showed.
Badly hit by a third wave of the coronavirus pandemic, this has led to the shutdown of its major cities with its attendant effect on Nigeria’s crude oil sales.
India’s crude oil import according to the Indian High Commission in Nigeria in 2020 amounted to $10.03bn. This, according to the Nigerian National Petroleum Corporation represents 17 per cent of Nigeria’s total crude exports for the year.
A drop in demand occasioned by the surge in COVID-19 cases in April has had ripple effects on Nigeria’s oil demand and sales.
According to The Punch, the NNPC was prompted to drop the official price of its main expor, Bonny Light, Brass River, Erha, and Qua Iboe, by 61-62 cents per barrel which is below its April prices.
These products traded at $0.9, $0.8, $0.65, $0.97 respectively below the international benchmark.
Report has it that India had been buying the Nigerian crude oil but its refineries have been operating at about 95% capacity with the surge in COVID-19 cases.
An official at the IOC was quoted as saying, “If cases continue to rise and curbs are intensified, we may see cuts in refinery runs and lower demand after a month.”
India reportedly bought more American and Canadian oil at the expense of Africa and the Middle East, reducing purchases from members of the Organisation of Petroleum Exporting Countries (OPEC) to around 2.86 million barrels per day.