West African crude traders are being forced to offer steeper discounts due to record-high freight rates and a widening Brent-Dubai Exchange of Futures for Swaps (EFS), which have dampened demand from Asian refiners, as reported by Bloomberg.
Freight rates for shipments to Asia have climbed to their highest levels in over five years, sharply increasing transport costs and reducing the competitiveness of West African grades. Brent-linked crude, including Congo’s Djeno and Nigerian exports, is struggling to attract buyers despite significant discounts.
The widening Brent-Dubai EFS, which influences pricing preferences for refiners, has further reduced Asian appetite for West African oil, as many refiners favor Dubai-priced barrels for cost efficiency.
The surge in shipping costs is driven by broader market trends, including increased global crude supplies, the return of Venezuelan barrels, and rising geopolitical tensions, particularly between the United States and Iran. Daily earnings for supertankers on the Middle East Gulf-to-China route have jumped to $157,358, the highest since April 2020, intensifying the economic pressure on long-haul West African exports.
Indian refiners and other Asian buyers are increasingly turning to shorter-haul Middle Eastern supplies, which are more economical, leaving West African producers like Angola, Nigeria, and the Republic of Congo facing softer pricing and reduced market share.
Analysts warn that if freight costs remain elevated and the Brent-Dubai spread persists, regional oil revenues could face prolonged pressure, signaling a challenging environment for West Africa’s export-dependent energy sector.
