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Nigerian National Petroleum Corporation Limited (NNPCL) will start pricing its crude cargoes against the monthly average of Dated Brent, the physical-crude benchmark, according to a report by Bloomberg News.
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’ll be applied to cargo pricing, they said.
NNPCL plans to stick with initial nominated crude loading dates for pricing purposes, according to the circular.
The traders said it will be more difficult to compare the price of NNPC’s shipments to Europe with cargoes from the Mediterranean and North Sea, as well as WTI Midland — most of which are priced using the five-day system.
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