- Production is still below the 2025 budget target of 2.06m bpd.
- Bonny terminal lifts 8.07m barrels, Forcados at 9.04m barrels.
- Dirty oil exports surge with France, Spain, the U.S. and India as key buyers.
Nigeria is making a strong comeback in the global oil scene, with production hitting impressive new heights in July. The Nigerian Upstream Petroleum Regulatory Commission (NUPRC) reported that output averaged 1.71 million barrels per day (bpd), which is a notable 9.9% increase from last year. While this is a significant recovery, it still falls short of Nigeria’s 2025 budget target of 2.06 million bpd, showcasing both the progress made and the hurdles that remain in maintaining higher production levels, reports Break Wave Advisors.
Terminal Performance and Export Flows
The performance at key terminals highlights this rebound. The Bonny terminal saw a lift of 8.07 million barrels in July, marking a 13% increase from June, while the Forcados terminal rose to 9.04 million barrels, reflecting a 2.1% month-on-month growth. Export flows have also mirrored this upward trend, with dirty oil shipments surging since the end of Q1 and continuing through the summer months. France, Spain, and the U.S. are still major buyers, but India has become an increasingly important market. Nigerian exports to India peaked at over 11 million barrels in March before settling at 7 million barrels in August, still more than double the figures from the same time last year.
Shifts in Indian Buying Behaviour
India’s growing demand for Nigerian crude is tied to changes in its buying patterns. Imports of Russian crude dropped by 17% in April and 8% in May, before seeing a slight 7% rebound in August. The refining capacity in Russia has taken a hit due to Ukraine’s drone strikes, with around 17% of its capacity affected across various facilities in Syzran, Volgograd, Saratov, Ryazan, and Krasnodar. This disruption has raised concerns about the reliability of supply. Compounding the uncertainty are U.S. warnings regarding India’s purchases of Russian oil, which could further solidify Nigeria’s role as a more dependable alternative supplier.
Tanker Market Dynamics
The changing trade flows are clearly visible in the patterns of oil tonne-days. With Russian exports to the Far East taking a hit, the growth in tonne-days slowed down in late summer. However, current levels are still about one-third higher than the seasonal average we’ve seen over the past two years. This situation bodes well for Nigeria, especially since a production boost in July, if it continues, could enhance its influence in the coming months.
Freight rates are also reflecting these shifting market dynamics. After a spike in mid-June, VLCC freight rates on the MEG–China route have dipped to WS 66, although they’re still 40% higher compared to last month. Meanwhile, Suezmax rates on the Black Sea–Mediterranean route have surged to WS 140, marking a 30% increase for the month. On the flip side, Aframax rates in the Mediterranean have dropped to WS 130, which is a 13% decline from last month. On the AG–Japan route, freight rates have risen to WS 157, showing a steady climb after their mid-June peak above WS 200.
Vessel Availability Trends
The positioning of fleets continues to adapt to the changing trade flows. At Ras Tanura, the number of VLCCs has decreased to around 68 vessels, down 28 from its peak in Week 28. In West Africa, Suezmax availability is still on the lower side, but it’s gradually inching closer to the annual average of 59. In the clean tanker market, LR2 availability in the Arabian Gulf has fallen well below the annual average of 11 vessels, while MR1 activity at Skikda has surged to a high of 44, up from a low of 35 in Week 32.
Tonne-Day Developments
When it comes to dirty tonne-day trends, we’re seeing a mixed bag across different segments. Over the last six weeks, the VLCC segment has lagged significantly behind the annual average growth rate, while the Suezmax segment experienced a spike in tonne-days during the summer that has carried into early September. Aframax tonne-day growth is still ongoing, but it’s slowing down and remains below the annual average.
In the clean tanker sector, seasonal tonne-day development has been uneven. Early September data showed Panamax and MR1 tanker levels trailing below the annual average, while the MR2 segment posted stronger growth over the past four weeks, signalling shifting demand dynamics within the clean trades.
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Source: Break Wave Advisors
