- Iran seeks OPEC support against US sanctions
Ejiofor Alike with agency reports
The influx of United Statesâ€™ shale oil into refineries in northwest Europe and the Mediterranean, coupled with the adoption of discount pricing by some oil-producing countries to trade with buyers in east and western Europe have hurt demand for Nigeriaâ€™s sweet crude in the international market.
This is coming as Iranâ€™s oil minister, Bijan Zanganeh has asked the Organisation of Petroleum Exporting Countries (OPEC) to support his country against what he called â€œillegal, unilateral and extraterritorial sanctionsâ€ referring to the United States sanctions on Iran after the United States pulled out of a nuclear deal with Tehran.
Reuters reported that while Angolan cargoes were gradually clearing yesterday, as the state-owned firm, Sonangol was said to be offering Dalia grade at a discount of $1.30 to dated Brent with only a couple of cargoes remaining from the June programme and about half the July programme sold.
However, unfavourable arbitrages have affected demand for Nigeriaâ€™s light sweet crudes, particularly from traditional buyers such as Indian refineries that have started to snap up U.S., shale oil instead.
Indiaâ€™s Reliance Industries, which owns the worldâ€™s biggest refining complex, reportedly imported 1.26 million bpd of West African grade in April, down 3.8 per cent from March and down 10.7 per cent from a year ago.
The force majeure on exports of about 250,000 barrels per day Bonny Light crude has remained in place following the leak on Trans Forcados Pipeline, while repairs are ongoing on the Trans Ramos pipeline, which also feeds crude to the Forcados terminal.
Oil traders were quoted as saying that a handful of cargoes remained from Nigeriaâ€™s June loading programme as Nigerian grade struggled to find buyers.
According to the traders, with stiff competition for buyers in Europe and Asia from both Mediterranean and US grades, Nigerian crudes have felt the pinch badly in the past few weeks.
In a related development, Iranâ€™s oil minister has asked OPEC to support his country against what he called â€œillegal, unilateral and extraterritorial sanctions.â€
US President Donald Trump earlier this month abandoned a nuclear deal with Iran and announced the â€œhighest levelâ€ of sanctions against the OPEC member. Iran is the third-largest oil producer in the Organisation of the Petroleum Exporting Countries after Saudi Arabia and Iraq.
â€œI would like to… seek OPECâ€™s support in accordance with Article 2 of the OPEC Statute, which emphasises safeguarding the interests of member countries individually and collectively,â€ Iranian Oil Minister Bijan Zanganeh said in a letter seen by Reuters.
The letter was addressed to the United Arab Emirates Energy Minister Suhail al-Mazrouei, who holds OPEC presidency in 2018.
In another development, crude oil prices rebounded sharply yesterday supported by a report that Saudi Arabia, other OPEC states and non-OPEC allies aim to stick to a global pact on cutting oil supplies until the end of 2018.
The producers are ready to make gradual adjustments to offset any supply shortage, a Gulf source familiar with Saudi thinking said.
The oil producers participating in the output reduction deal are satisfied with the result of their agreement, which was due to end at the end of 2018, the Gulf source told Reuters.
United States crude ended the session at $1.48, or 2.2 per cent, higher at $68.21. The contract fell about $5.50 a barrel, or 7.6 per cent, over the last five trading sessions.
Global benchmark, Brent rose $1.94, or 2.6 per cent, to $77.33 a barrel, after trading as low as $74.81 earlier.
Brent crude has dropped by as much as $5 a barrel this week from a 3Â½-year high of $80.50 a barrel on May 17, after reports that OPEC and Russia may increase supply at a June meeting.