Bonny Light, one of Nigeria’s benchmark crude oil grades, traded between $12 and $13 per barrel between Monday and Friday.
Bloomberg quoted traders monitoring the West African market to have provided the data.
This price is $15 lesser than the dated price of Brent crude, the global benchmark of crude oil which traded at $28 on Friday.
Despite a record supply cut by the Organisation of Petroleum Exporting Countries (OPEC) and its allies (OPEC+), demand for crude oil has dropped due to closure of industries across the world.
Bonny Light is one of Nigeria’s crude grades. Other grades are Forcados, Qua Iboe and Brass River.
Restrictions imposed by various governments across the world to contain the coronavirus pandemic has led to the closure of factories and refineries and in turn, a drop in global demand.
The current selling price is below the cost of production for Nigerian crude producers which is estimated at $22 and the budgeted crude benchmark of $30 per barrel.
Crude earnings account currently account for 90% of Nigeria’s forex earnings.
“The market is simply responding to the forces of demand and supply precipitated by the COVID-19 pandemic,” the Nigerian National Petroleum Corporation was quoted to have said in a statement.
“We are working assiduously to guarantee a steady market for our crude in the short and long term.”
Traders also report that 10 million barrels of crude made available for sale in April are still unsold with another 60 million expected to hit the market in May.
At the recently held OPEC meeting, Mohammed Barkindo, the OPEC secretary-general, had said the world was running out of storage space for unsold crude cargoes.
The demand crisis is not peculiar to Nigeria as spot supplies of Canada’s Cold Lake were reported to have been bought by a Chinese refiner at a discount of between $8 and $9 a barrel to ICE Brent on a delivered basis.