A glut of unsold Nigerian oil has built up again with as much as half of output due to be loaded during July 2023 still searching for buyers.
Traders of the nation’s oil said the surplus has been caused, in part, by a request for back taxes from shipping companies, which created a wariness among some of the firms about sending their vessels to collect the West African nation’s barrels.
While the government subsequently clarified that there would be a six-month grace period to comply with the tax request, traders said the lack of sales demonstrated that Nigeria needs to do more to resolve the issue.
The surplus is a sign that global reductions in oil supplies from leading producer nations have yet to tighten every market. There are between 20 and 22 cargoes that remain unsold for July, about half the total, according to the traders of West African crude. Shipments are typically about one million barrels.
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Earlier in June 2023, some shipowners were said to be avoiding the West African nation after a series of multi-million dollar tax bills were sent out, seeking to claw back unpaid duties from 2010-2019. The country’s tax authorities have given shipping companies a grace period to reconcile the tax backlog through a committee involving shippers and regulators.
The cost of shipping oil from Nigeria stood at $53,463 a day as of June 22, above the year-to-date average, according to data from the Baltic Exchange. Freight for ships hauling about 1 million barrels of crude from Nigeria to Europe surged the most in more than a year during the week of June 16 because of the tax issue.
Nigeria’s slow sales contrast with a more bullish picture in Angola, where crude supplies are sold out for July and differentials are inching higher, the people said. Supplies from Gabon and Chad are also mostly sold for July.
Much of Angola’s output is of a heavy-sweet variety that is popular with refiners in China, where demand remains healthy.
Angola’s Cabinda grade traded at a 60-to-70 cents-a-barrel premium to Dated Brent for July loading during the week of June 19, increasing from a premium of 30 cents for June barrels.
