Nigeria’s oil crisis compounded as India’s fuel demand crash by 60%

In what may have compounded Nigeria’s energy crisis, India, the country’s largest importer of crude oil, reported a 60% slump in gasoline and diesel demand in April 2020.

According to information obtained from oilprice, India, the world’s third-largest oil importer, recorded the crash in demand due to a nationwide lockdown to contain the spread of the coronavirus pandemic. The Indian Government, which announced the lockdown at the end of March, further extended it to the middle of May.

Gasoline and diesel sales in India crashed by 61% and 57% respectively in April, according to the provisional industry data provided to Reuters by 2 industry sources. The demand crash was more pronounced at the beginning of April, with gasoline sales plunging by 61% and diesel sales plunging by 64% in the first half of the month.

The low fuel demand is triggered by the lockdown, just as the refineries have cut their run rates and are battling with an almost filled up crude and refined products storage capacity.

This is a piece of bad news for Nigeria, as it has been struggling to sell its crude, even at discounted prices sometimes, but is still left with a lot of unsold cargoes of crude oil.

India overtook the United States as the largest importer of Nigeria’s crude oil, buying almost 400,000 barrels of crude oil per day, which is about 20% of Nigeria’s crude oil export.

The crude oil export revenue from India in the last quarter of 2019 was N592.5 billion, while the total export for the year 2019 is about N2 trillion. This will heavily affect Nigeria’s already low revenue and foreign exchange earnings.

It could be recalled that the NNPC Spokesman, Kehinde Obateru, during an interaction with journalists, said that Nigeria might consider production shutdown if the market conditions, like low oil prices, low oil demand and the storage crisis, persist.