Earnings from crude oil export for the country is under serious threat as demands from Nigeria’s third-largest importer of crude, India, has been on a consistent decline, recording its lowest oil imports in 10 years in the month of June.
As Nigeria’s largest export destination, the country relies heavily on India’s patronage to meet its crude oil sales targets as the government braces for a negative GDP growth rate and an ensuing recession. Nigeria’s minister of Finance, Zainab Ahmed revealed Nigeria collected over 56 per cent less retained revenues in the first five months of the year as oil prices crashed and demand waned.
Reports gathered indicated that India imported 3.2 million barrels per day in June, the country’s lowest since October 2011, and a 0.4 per cent decline from May and 28 per cent lower than the same period in 2019, as its refineries reduced demand due to maintenance and turnarounds.
The report also indicates July has not been any better due to weak demand due to the effect of the coronavirus pandemic.
Nigeria is India’s 13th largest country of import behind other crude oil exporters such as the US, Iraq, Saudi Arabia, and UAE. In contrast, India is Nigeria’s largest export destination. However, Iraq, Saudi and UAE are ahead of Nigeria as India’s top oil import countries.
In the quarter ending March 2020, Nigeria’s export to India was N637.5 billion or 15.6 per cent of total exports. Crude oil represented N526.8 billion of the total export amount.
India replaced the US as Nigeria’s largest export destination for crude as demand for crude increased in the second-most populous country in the world.
India has been one of the fastest growing economies in the world with industrialization widening its appetite for crude. However, the impact of COVID-19 has halted economic growth in India.
