Low-sulphur Nigerian specification gasoil on a fob offshore Lome basis has become much more expensive as west African gasoil values firm on concerns over middle distillates supply from the Mideast Gulf, and a shift in the Nigerian gasoil market complex.
Argus assessed ship-to-ship (STS) transfers of low-sulphur 50ppm Nigerian-specification gasoil cargoes carrying 5,000-20,000t at premiums of $105/t against front-month Ice April gasoil futures on 9 March, up from a premium of $16/t on 6 March.
Price discovery improved at the start of the week, as one market participant was quoted 10ppm diesel and high-sulphur gasoil on a fob offshore Lome STS transfer basis at premiums in the range of $100-115/t to front-month Ice April gasoil futures. Premiums to Ice April were heard last week as high as $49/t to front-month gasoil futures, one trader told Argus on 9 March.
The so-called "sulphur spread" between ultra-low sulphur diesel and high-sulphur gasoil was implied at $10/t, according to the quotes, but another trader said the spread should be wider.
Diesel and gasoil premiums have risen globally over the past week as a result of distillate supply concerns triggered by the Iran war. Vessels transiting the strait of Hormuz have come under fire from Iranian strikes, slowing the delivery of diesel and gasoil cargoes to global markets. West Africa received just over one in ten foreign diesel and gasoil barrels from the Mideast Gulf last year at 35,000 b/d, according to Kpler, while the nearby European market received 12pc of its 1.7mn b/d diesel and gasoil imports from the region.
Strength in offshore Lome values is partly down to supply concerns triggered by the Iran war, sources suggest, but other developments in the Nigerian downstream market may be providing further support to cash differentials. Nigeria's downstream authority NMDPRA last week withdrew some diesel and gasoil import permits, three market participants told Argus, which may have added to domestic supply concerns as the volume of imports allowed into the country has been reduced.
Price rises at Nigeria's 650,000 b/d Dangote refinery have combined with loading delays, according to sources. Dangote was approached for comment. Marketers have loaded from the refinery and are refusing to leave the premises, creating artificial scarcity in the wider market, sources told Argus.
Dangote said on 9 March that it would "continue to meet Nigeria's fuel demand despite global supply disruptions and market volatility". The Dangote refinery is operating "at its full nameplate capacity of about 650,000 b/d, with potential to increase production to around 700,000 b/d," Dangote Industries said.
Traders' ability to source foreign barrels for the Nigerian market in the meantime may be impeded by a withdrawal in some diesel and gasoil import permits. The hike in Dangote gasoil prices may have made foreign barrels more competitive, incentivising foreign buying interest. Dangote gasoil prices stood at N1,175/litre on 9 March, up from N900/l on the week, according to local fuel brokers.
Elsewhere in west Africa, gasoil availability in Ghana is normal despite "some level of speculation due to supply uncertainty", one downstream source said on 9 March. The country's downstream authority CBOD dismissed reports of fuel hoarding ahead of the next pricing window beginning 16 March.
