OREANDA-NEWS. Tight supplies and uncertain loading dates for Nigerian crude have dampened demand from Asia-Pacific buyers, with rival Asian grades displacing regular Nigerian supplies.

Total sales of June-loading west African crude to Asia-Pacific rebounded from a month earlier, to reach 1.92mn bl, with India buying almost 600,000 b/d, its highest level since January, and sales to China holding above 1.1mn b/d.

But a drop in July exports of Nigerian crude to Asia is inevitable. A wave of rebel group attacks has rocked the Niger delta, Nigeria's main oil producing region, cutting crude output by around 500,000 b/d, shutting in production of several grades, delaying loadings and deterring buyers.

Sellers seeking to profit from the supply tightness hiked their offers on certain grades. But Nigerian differentials are increasingly under pressure. Instead, buyers have been looking to cheaper alternatives, including in Asia-Pacific, where light sweet crude values have fallen sharply on weaker naphtha and gasoline crack spreads. Malaysian Labuan's premium to Qua Iboe, Nigeria's main crude stream, has narrowed by around $3.50/bl since January.

Indonesia's Pertamina bought no Nigerian grades in recent tenders, instead taking Congolese Coco, Angolan Girassol and regional crude like Brunei's Champion. And Indian refiner BPCL bought Russian Sokol last month, as well as Nigerian Agbami and Akpo, but shunned Nigerian grades affected by loading uncertainties.

India's largest refiner and top Asian buyer of Nigerian crude IOC excluded Bonny Light, Brass River and Qua Iboe — all subjected to force majeure last month — from its latest tender for sweet crude. ExxonMobil lifted force majeure on Qua Iboe on 3 June, as loadings returned to normal, but it remains in place on exports of Bonny Light, Brass River and Forcados, with loading disruptions also affecting Escravos.

Other producers pose a growing threat to Nigeria's market share, notably Azerbaijan whose state-owned Socar has had some success selling Azeri crude to regular Asian buyers of Nigerian grades. Around 7mn bl of BTC Blend is to set sail east in June. But the relative weakness of light sweet Asia-Pacific crudes has since closed the arbitrage for flows of Azeri crude to the region.

But more reliable Angolan crude has benefited from Nigeria's production issues as well as from strong Chinese buying interest. Chinese demand for June cargoes of Angolan crude fell from the highs seen in April and May, to around 860,000 b/d. But July cargoes have done a brisk trade as buying interest in China rebounded. Most Angolan grades strengthened by 30-50?/bl relative to North Sea Dated. Lighter Angolan grades like Girassol and Nemba have found particularly strong demand from European and Asian buyers seeking reliable alternatives to Nigerian crude.