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West African Crude Differentials Hold Steady Amid Middle East Supply Disruptions
West African crude oil differentials were stable on Tuesday, with the market showing little movement despite growing supply disruptions in the Middle East. High shipping costs continue to weigh on demand for the region's oil, offsetting upward pressure from geopolitical tensions.
Pricing and Demand
Offers for key Nigerian oil grades from last week saw no new transactions, indicating a cautious market. According to trade sources, physical cargo prices in the broader market have climbed above $120 per barrel.
- Qua Iboe was last offered at a premium of $6 to the dated Brent benchmark.
- Bonga was offered at a premium of $9 to the benchmark.
Market activity remains subdued as elevated freight rates make long-haul cargoes from West Africa less economically attractive for buyers, particularly those in Asia.
AdGeopolitical Context
The stability in West African prices comes as the market grapples with supply cuts from Saudi Arabia. According to trade sources, the kingdom has reduced its oil shipments to Europe following a drone attack that damaged a key export pipeline to the Red Sea.
This disruption has prompted European buyers, including Poland, to actively seek alternative sources of crude. The search for replacement barrels highlights the growing concern over supply security, though the immediate price impact on West African grades has been muted by logistical costs.
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