The Game of Musical Chairs: Nigeria’s Crude Exports to US Soar in 2023

Crude quality is at the heart of this game! (5 charts)

Russia’s invasion of Ukraine and the subsequent Western sanctions on Moscow’s energy industry have reshaped global oil, gas, and coal trades. It was challenging at the beginning to predict trends in oil exports and imports as destinations and maritime shipping routes kept shifting. Several players in the market were assessing the best means to maximize profits, especially amid sanctions on Russian oil barrels. However, data tells us that there are

always some oil volumes in international trade that are considered “flexible”, and these include flows from producers with volatile production, such as Libya and Nigeria.  The market assumes that such producers will pump a certain minimum of output and that any additions will need to find new buyers.  

Trade data and oil trends influence oil supply and inventories, and both are essential elements to determine market prices. Understanding the factors that influence the direction of trade is extremely important for traders, investors, analysts, and policymakers

On top of that, trade routes and destinations are determined by crude quality—and this is a topic we focus on in today’s report.  For instance, the US produces the largest amount of light sweet crude in the world.  Yet the US East Coast (PADD 1) imports light/medium sweet crude from overseas. And in the event of an economic recovery, PADD 1 imports of light/medium sweet crudes could increase. But from where will sweet crude cargoes originate? This is part of today’s discussion.

Quick Facts: Nigeria’s Oil Exports

Nigeria’s oil production faces four problems:

1- Political instability has increased production and export volatility.  Figure (1) below shows how unstable Nigeria’s crude and condensate exports have been over the past years.