Bonny light is one of the crude grades in Nigeria. Recently, its prices dropped to $12 to $13 barrel this week. Brent crude, a global benchmark of crude oil was trading at $28 on this Friday.
Bonny light is trading less than 15 dollars per barrel than the Brent crude. The production cost for bonny light crude for Nigerian crude oil producers is around $22 per barrel. On every barrel, Nigerian crude producers are making a loss of $15 per barrel.
Further, it seems like OPEC and OPEC+ nations deal regarding the production cut was not sufficient to save crude oil producers around the world. The prices of crude oil are decreasing due to the closure of business across the globe.
Major European countries are under lockdown, the primary supplier of Nigeria. However, European nations are under lockdown due to preventive measures to stop coronavirus pandemic.
Nigeria is Africa’s largest economy. Day by day, it is becoming a challenge for Nigeria oil producers to store its unwanted crude. As per experts, soon, Nigeria will face problems regarding storage capacity. It slowly counts on crude oil sales as 60 percent of government revenue comes from crude oil and 90 percent of foreign earnings.
Officials from the Nigerian Petroleum Corporation told the bonny light, or crude market is responding to the basic concepts of demand and supply. Demand has decreased due to coronavirus pandemic; however, the amount of crude oil has not declined as compared to the market.