Amid the availability of large volumes of unsold cargoes in the West African market, three of Nigeria’s major crude oil grades traded at a deeper discount in March, the Organisation of the Petroleum Exporting Countries said in a new report.

The crude differentials of the country’s reference crude oil grade and the largest export grade, Bonny Light and Qua Iboe respectively, fell to discounts of $0.55 and $0.65 per barrel respectively on a monthly average.

OPEC, in its latest monthly oil market report, said the overall physical crude market fundamentals remained weak in March, which was reflected in flattening price forward curves and low crude differentials.

It said the factors that influenced crude differentials included high availability of crude volumes for March and April loadings, particularly in the Atlantic Basin; and soft crude demand from refiners due to spring refinery maintenance in Asia.

Others were the slow recovery of US refinery operations from February outages; and weak demand in Europe partly due to reinstatement of mobility restrictions and local lockdowns.

The oil cartel noted that the blockage of the Suez Canal by the large container ship Ever Given disrupted the shipment of crude and oil products for several days, but had limited impact on the physical market as supplies remained plentiful.

It said, “The light sweet crude value in the Atlantic Basin fell further due to unfavourable west-to-east arbitrage and lower buying interest from China, as well as rising export volumes in the Mediterranean and the availability of large volumes of unsold cargoes in the West African market that added additional downward pressure on crude differential values.

“On a monthly average, crude differentials of Bonny Light, Forcados and Qua Iboe moved into deeper discount against the Brent benchmark in March, falling on monthly average to discounts of 55¢/b, 33¢/b and 65¢/b, respectively.”

Nigeria produces some of the easiest-to-refine crude that typically commands a premium over Brent, the global oil benchmark.

The country’s crude oil production rose slightly to 1.43 million barrels per day in March from 1.42 million bpd in February, based on direct communication, according to OPEC.

The 13-member group said the physical Brent market showed a weaker structure last month, reflecting the slower demand and a well-supplied crude market.

Crude imports by India, the biggest buyer of Nigerian oil, continued to decline sharply in February, averaging just under four million bpd, the lowest in four months, as renewed COVID-19 impacts and increased prices weighed on demand for crude imports.

OPEC said India’s crude inflows were down 0.6 million bpd from the previous month and had fallen by a cumulative 0.8 million bpd after marking the second-highest on record in December 2020 at 4.8 million bpd.

It said, “The latest available data for crude imports by source shows Iraq remained the top crude exporter to India in January with a share of 19 per cent.

“Saudi Arabia was second with over 16 per cent, followed by the UAE, the United States, and Nigeria, with 13 per cent, 11 per cent, and seven per cent respectively. Imports from the US were sharply higher at 0.5 million bpd compared to 0.3 million bpd the month before.”

OPEC’s total crude oil production averaged 25.04 million bpd in March 2021, up by 0.20 million bpd month-on-month, according to secondary sources.

“Crude oil output increased mainly in IR Iran, Angola, Libya and Iraq, while production decreased primarily in Saudi Arabia,” the group said.