Nigeria, Africa’s top oil producer, last month overtook Saudi Arabia as India’s top oil supplier for the first time in at least four years, according to ship tracking data compiled by Reuters.
Indian refiners are said to be switching from long-term contracts with Middle East suppliers to cheaper African crudes through spot market.
The shift comes as the gap between the international benchmark Brent and the Middle East price marker narrows. The premium for Nigerian crude over Brent has plummeted in recent months, making it more attractive.
India, which recently replaced the US as the single largest importer of crude oil from Nigeria, had in December 2014 cut its import of the Nigerian crudes by 38 per cent, according to data from the Nigerian National Petroleum Corporation.
In a bid to attract buyers, the NNPC lowered the official selling price for its largest crude oil stream, Qua Iboe, to dated Brent plus 35 cents per barrel, the lowest differential since May 2005. Bonny Light fell to dated Brent plus 23 cents. That’s the smallest differential since 2005 and compares with a 50 cent premium in June and $2.55 a year earlier, data compiled by Bloomberg showed.
Saudi Arabia, the world’s top crude exporter, also fell behind Russia and Angola as the biggest crude supplier to China last month, official data showed this week.
The Middle East country’s failure to maintain its position in some markets comes despite leading a strategy by the Organization of the Petroleum Exporting Countries to keep output high to drive out competitors.
A glut of African cargoes has emerged as the United States shale boom cuts American demand and accelerated as OPEC keeps output high.
The share of African oil, mainly from Nigeria and Angola, jumped to 26 per cent of India’s total imports in May, up from around 15.5 per cent in April and the highest in more than four years, according to tracking data on tanker arrivals.
At the same time, the Middle East share fell to 54 per cent in May from 61 per cent, with Saudi Arabia supplying some 732,400 barrels per day compared with Nigeria’s 745,200 bpd.