Nigerian crude oil prices began the week on a weaker note as growing concerns over global oversupply weighed on the market. Bonny Light, Nigeria’s premium crude grade, traded near $69 per barrel, following signals from OPEC+ about a modest production increase for November and the resumption of crude exports from northern Iraq.
The early-week dip comes amid fears that higher supply from key producers could tip the market into surplus, despite generally elevated global oil prices.
Oil traders are now closely watching developments as OPEC+ prepares to ramp up production by 137,000 barrels per day, a move seen as part of efforts to reclaim lost market share. Meanwhile, exports from northern Iraq resumed via Turkey, adding an estimated 150,000 to 160,000 barrels per day back into the global market.
The market reaction has been swift, with oil benchmarks like West Texas Intermediate (WTI) closing at $62.58 per barrel, down more than 10% year-on-year. WTI has been trading in a narrow range between $61.87 and $65.40, with technical indicators pointing to potential consolidation or a breakout in the weeks ahead.
Citigroup analysts have forecast that crude prices could slide further, possibly reaching $60 per barrel by year-end, citing increased supply and global economic uncertainty.
In Asia, competition is intensifying as countries like the U.S. ramp up exports, placing downward pressure on Middle Eastern crude prices. Despite some strategic stockpiling by China, refinery demand is likely to remain soft due to maintenance shutdowns and import quota limitations.
Dangote Refinery Boosts Domestic Intake, Cuts Imports
Back home, the Dangote Refinery continues to increase its intake of Nigerian crude under a two-year extension deal with the Nigerian National Petroleum Company (NNPC). Under the agreement, the state oil company will supply 300,000 barrels per day, translating to five cargoes each in September and October.
Since October 2024, NNPC has delivered over 82 million barrels to the $20 billion refinery, 60% of which was paid for in naira as part of a broader strategy to ease pressure on foreign exchange reserves and stabilize fuel prices.
The refinery, which began operations in January 2024, is expected to stop importing crude by the end of 2025, reaching full processing capacity of 650,000 barrels per day.
Global oil supply dynamics remain complex. Russian exports recently hit a 16-month high, despite ongoing U.S. sanctions. Meanwhile, drone strikes on Russian refineries by Ukrainian forces could restrict output and alter export patterns.
Geopolitics aside, U.S. gasoline inventories continue to show a bias toward draws, offering some support to spot prices. However, market observers say the current oversupply outlook combined with weak refinery demand in key markets could lead to sustained price pressure.
Although U.S. policy under former President Trump has focused on keeping oil prices low to curb inflation, analysts say no major intervention is expected unless WTI falls below $50 per barrel.
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