Traders are flocking to the Urals crude blend because they see the Nigerian grades as relatively pricey, with traders reluctant to offload the country’s cargoes.

Nigerian crude grades are failing to attract buyers from Europe, China and India as traders, to cut cost, shift to a blend of WTI (the main oil benchmark for North America) and Brazilian grades as a substitute for the country’s highly sought-after sweet crude.

Top crude grades of Africa’s biggest oil producer,Bonny Light, Forcados and Brass, have a reputation for being light in sulphur, a quality that has made them the darling of refineries in Europe and Asia.

But traders are flocking to the Urals crude blend because they see the Nigerian grades as relatively pricey, with traders reluctant to offload the country’s cargoes, according to S&P Global Commodity Insights.

That had driven Nigeria’s premium grade Bonny Light to 50 cents per barrel discount to Dated Brent on 6 June.

“WAF (West Africa) is losing out to alternatives in Europe – WTI, Midland and Brazilian grades have been consistently undercutting differentials, and sellers of Nigerian barrels just cannot find demand in Europe,” the research house said, quoting a source.

The development adds more pain to the woes of Nigeria, where output hit a multi-decade low of below 1 million barrels a day last year. Already, the nation has struggled to contain incidents of oil theft on a grand scale in the far south which sapped as much as $1 billion from the government’s revenue in the first quarter of the year.

On account of a price ceiling placed on the crude oil from Russia following its war with Ukraine, which has made the grade cheaper, African crude graders are struggling to find patronage from refiners in Asia, outsold by the Urals crude.

“I don’t think Nigeria can sustain competition with WTI Midland mixed with Brazil, it’s been a long time now since we have seen Europe able to absorb Nigerian exports,” a source told S&P Global Commodity Insights.

It comes as an early blow to plans by newly-inaugurated President Bola Tinubu to bolster production and buck up oil earnings, at a time the government is spending nearly everything it earns to service debt.

President Tinubu had promised in his manifesto ahead of the February presidential election to scale up Nigeria’s daily output to 2.6 million barrels by 2027 and 4 million come 2030.

That compares to April’s production (condensate inclusive), which fell 17.8 per cent to 1.25 million bpd.

“Nigerian producers have to lower prices to compete,” said Uwadiae Osadiaye, a chartered financial analyst with Lagos-based FBNQuest.