High Freight Costs Stall Nigerian and Angolan Crude Cargoes

Cargoes of Angolan and Nigerian crude are struggling to clear in the West African market as high freight rates continue to drag on differentials. A trader said on Wednesday that the market was facing a "combination of high freight costs, recovering Middle Eastern supply, and widening discounts," with several Nigerian and Angolan cargoes yet to find buyers.

Prices are falling in response. Offers for Angolan Dalia were heard at a discount of $20 to dated Brent on the Argus Open Market this week, far below the discount of $9.95 heard for the grade last week on the Platts platform.

Angolan discounts drag Nigeria lower

The slide in Angolan differentials is pulling Nigerian grades down with it, according to another trader. That link matters because the two producers compete for many of the same buyers, so weakness in one market tends to spread to the other.

Freight has been the central problem. With shipping costs elevated, buyers are reluctant to commit to West African cargoes when supply from the Middle East is recovering and offering a cheaper alternative. Discounts have had to widen to keep the barrels moving, and even then, several cargoes remain unsold.

The gap between this week's Dalia offer of a $20 discount and last week's $9.95 discount on Platts illustrates how quickly the market has shifted.

Chevron sets 2028 target for Equatorial Guinea gas

Elsewhere, US oil major Chevron is on track to deliver first gas from its offshore Aseng gas project in Equatorial Guinea in 2028, a senior company executive said. The project adds another source of gas supply to the wider West African region, even as the crude market faces its current glut.

What it means for Nigeria

Wider discounts translate into less revenue per barrel for Nigeria at a time when the government is counting on oil earnings to support the naira and fund the budget. If freight stays high and Middle Eastern supply keeps recovering, Nigerian grades could remain under pressure in the weeks ahead.