Iran sanctions: European buyers turn to Nigerian oil

European refiners are turning to Nigerian crude oil grades following a drop in exports from Iran after the United States’ sanctions on the second-biggest producer in the Organisation of Petroleum Exporting Countries.

A shortage of distillate-rich crudes in the Mediterranean caused by the dip in Iranian exports has redirected some supply of the likes of Urals , Azeri or CPC away from northwest Europe, according to Reuters.

Qua Iboe, Nigeria’s largest crude oil grade, was said to have changed hands at a premium of $1.75 to dated Brent this week, its highest in months, while the supply of similar grades such as Forcados and Bonga was said to be virtually sold out.

There were around a dozen Nigerian cargoes still believed to be available for sale but this was down from closer to 20 at the start of the week.

In terms of tenders, Turkey’s Tupras awarded a tender for West African crude to Total.

Traders said the grade involved was Forcados, while Indian Oil Corporation’s tender for crude loading March 1-10 closed on Thursday, meaning the winner had not yet emerged.

Traders were quoted as saying on Thursday that the demand for Angolan crude from Chinese independent refiners and for Nigerian cargoes from European customers had breathed life into the West African market.

A drop in freight rates for shipping West African crude to China is partly behind the pickup, but predominantly, it is the so-called teapots that have started stocking up again after a lull during December, according to them.

The benchmark VLCC rate for the WAF-Asia journey was said to be around its lowest since September, having hit three-year highs in November, which dealt a blow to demand particularly for Angolan crude.

One trader said Chinese refiners had also been asking for Congolese Djeno.

Meanwhile, India, a major buyer of Nigerian crude, is aiming to seek another waiver from Washington to continue importing Iranian oil after the first waiver expires in March, S&P Global Platts reported on Thursday.

As US sanctions on Iran came into force in early November, US surprised the market and granted eight key buyers exemptions from its sanctions, enabling China, India, Japan, South Korea, Turkey, Taiwan, Italy and Greece to still purchase some amount of Iranian crude.

Nigeria is producing 1.78 million barrels of crude oil per day, according to the Minister of State for Petroleum Resources, Dr Ibe Kachikwu.

Kachikwu said on Wednesday that the country was expecting output from Egina oilfield to reach 150,000 bpd by the end of the month which could boost total production.

With production cuts agreed by OPEC, Nigeria’s output has been around 1.74 million bpd , excluding extremely light oil known as condensates. The minister said the country produced condensates of 350,000 bpd .

Kachikwu has said Nigeria aimed to produce 2.2 million bpd in 2019