Nigerian crude oil exports threaten market balance

Shell lifts export restrictions in Nigeria after more than a year, creating a situation that could put another quarter-million barrels of oil on the market.
By Daniel J. Graeber  |  June 7, 2017 at 9:30 AM
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June 7 (UPI) -- Oil export operations in Nigeria are back in service following repairs, a division of Royal Dutch Shell said, adding to lingering supply-side concerns.

A spokesperson for the Shell Petroleum Development Company of Nigeria Ltd said the company lifted force majeure, a contractual condition related to circumstances beyond the control of the parties involved, for exports from the Forcados terminal in Nigeria following repairs to an export artery.

The spokesperson told UPI in response to emailed questions there were "three sabotage leaks" on the pipeline that were repaired with the help from federal authorities and the governments from the oil-rich Niger Delta states.

Nigeria is a member of the Organization of Petroleum Exporting Countries, but is exempt from the group's effort to balance an oversupplied market with managed production declines. Like fellow OPEC-member Libya, Nigeria said it needs to ensure the oil revenue stream remains flowing for the sake of national security.

According to figures published by pricing agency S&P Global Platts, Nigerian crude oil production was 1.73 million barrels per day, an increase of about 5 percent, or 80,000 barrels per day, from April. Production from Nigeria last month was at its strongest level since March 2016 and June output could recover even further given the restart of Shell's export arteries.

A research note emailed from Ole Hanson, the head of commodity strategy at SaxoBank, said Nigerian production was contributing to a sense that the market for crude oil was oversupplied despite OPEC's efforts.

"The world remains awash with oil, and additional barrels continue to reach the market," he said.

By his estimate, Shell's announcement, which ended an export restriction that lasted more than a year, could lead to another 250,000 barrels per day from Nigeria.

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