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The Nigerian National Petroleum Company Limited will review how its crude cargoes are priced from January 2024. A report by Bloomberg quoting a circular by the company stating that the new product pricing would be against the monthly average of the physical-crude benchmark, Dated Brent. Traders are already saying if implemented, the development could make handling the nation’s barrels more risky. Up until now, pricing has been based on Dated Brent’s average settlement in the five days after loading. “Traders said the switch will make the cargoes more prone to the kind of volatility that besets wider oil markets. The new approach may require increased use of hedging because of the less-precise timeframe that would be applied to cargo pricing,” according to the report. An NNPC spokesman didn’t immediately respond to requests for comment. The circular didn’t give a reason for the decision. Knowing when to hedge can also be challenging since loadings are sometimes deferred from late in the month to early the following month. NNPC plans to stick with the initial nominated loading dates for pricing purposes, according to the circular. The traders said it would be more difficult to compare the price of NNPC’s shipments to Europe.
Punch