Business

Nigeria reduces crude price by 1.5%, may incur OPEC anger

Trump victory pushes oil prices lower by 1.5%

In a bid to regain its lost impact on the international oil market, Nigeria has opted to slash the official selling price of the country’s crude oil grades, by 1.5 percent, from $51.27 to $50.3 per barrel.

According to National Petroleum Corporation (NNPC) on Thursday, the strategy is a well thought out plan to make Nigeria’s crude oil attractive to buyers and to help it regain its share of the global crude oil market.

The NNPC confirmed that the price cuts across all brands of crude from Nigeria compliments an effort to place Nigeria back in the global oil market at a time there is a huge glut of cargoes.

It further stated that Qua Iboe, Nigeria’s largest export crude oil, which was mostly hit by the oil crisis since 2014, is expected to pick up as the Niger Delta crisis is being resolved.

However, Mele Kyari, group general manager, Crude Oil Marketing Division of the NNPC, said that the price reductions are due to a huge cargo overhang as the country attempts to regain market share.

Hear him: “At least five companies that market Nigeria’s crude oil had raised the issue of high official selling prices in the past.”

He added that the decision to cut the price was unrelated to such complaints.

But another report said there is likely going to be a negative reaction of the Nigerian approach by the OPEC Price Monitoring Division.

Said an expert on the intentional oil market, ”Nigeria may not go too far on this approach though it is still in desperate search for money to run its 2016 budget, given that most international financial institutions are not forthcoming in giving it soft landing, reducing price of crude without express approval from OPT will worsen its case.”

The price reductions, is coming on the heels of the OPEC member-countries’ attempts to cut its combined output to 32.5 million to 33 million barrels a day in an effort to steady oil markets.

But an NNPC source said the Corporation is targeting five major buyers of West African crude in the new price offer.

By Emma Eke….

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