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COVID-19 surge: Nigeria’s oil revenue at risk as India slows down crude purchases

COVID-19 surge: Nigeria’s oil revenue at risk as India slows down crude purchases
May 20
16:12 2021

India, one of Nigeria’s top oil buyers, has slowed down its crude purchases as it continues to battle rising COVID-19 infections.


Figures from the Nigerian Bureau of Statistics fourth quarter (Q4) 2020 report on ‘Foreign Trade in Goods and Statistics’, show that India is Nigeria’s top export destination accounting for 17.12 percent of exports during the period. Crude oil also accounts for 79 percent of Nigeria’s export in the quarter.

India has continued to witness a spike in coronavirus infections, with figures on Thursday putting total active cases at 3.12million, according to data from MOHFW(India) and John Hopkins.

S&P Global Platts, a provider of energy and commodities information, reports that India’s state-owned refiners typically issue tenders for a large proportion of their crude requirements.


Refiners in India, the world’s third largest crude oil importer, such as Indian Oil Corporation, Hindustan Petroleum Corp Ltd (HPCL), and Bharat Petroleum Corp Ltd usually buy a significant amount of Middle Eastern and West African crudes through regular tenders.

According to trading sources, no new tenders have been issued since late April, 2021.

The last buy tender was awarded by HPCL on April 23 for crude loading from West Africa in early June, according to S&P Global Platts data.


“Three weeks without [Indian Oil Corp.] weighs dramatically on Nigeria. IOC is the biggest Nigerian grades buyer,” a trader told S&P Global Platts.

“IOC skipped the last decade of June [loading window] and now seem to have skipped July 1-10 also.”

S&P Global Platts noted that sellers of Nigerian crudes are now seeking other buyers in Asia and Europe as India’s COVID-19 situation remains shrouded in uncertainty amid stringent regional lockdowns and sagging domestic consumption.

Length in the European market as a result of continuous flows of competitively priced West Texas Intermediate (WTI) Midland crude oil from the US could limit the upside for Nigerian demand in the region.


“I think any rise in demand and hence value coming from Europe for Nigerian crude is going to be limited and remain so until the whole market is better balanced. We still have far too much competing light sweet [crude] available in Europe,” another trader said.

S&P Global Platts Analytics expects India’s oil demand woes to worsen in May but forecasts a slight recovery in the second half of the year.

“In essence, we expect India’s oil demand for May/June to drop to slightly below the level of July/August last year. Demand in H2 will be 650,000 b/d higher than H1, driven by a pickup in economic activity amid widening vaccination rollout,” it said in a recent note.

However, Platts Analytics expects Indian oil demand to grow by 350,000 b/d in 2021, but still below 2019 levels.



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