Shell Plc and Eni SpA have announced that they are declaring a force majeure on key oil flows. This move could disrupt supplies and is worrying investors, who are already concerned about Russia’s invasion of Ukraine.
Shell has enacted a measure that restricts exports from its Bonny terminal, this development, linked to pipeline vandalism, and affected the crude oil export programme from Bonny Brass crude cargoes.
Force majeure is a legal term that allows companies to break their contractual obligations for reasons that are out of their control. It usually doesn’t mean that the entire supply of a given product will be lost for a period of time. Goods may still be shipped and repaired if necessary. The oil market is keenly monitoring the effect of Russia’s invasion of Ukraine on oil supply. Some oil companies have discontinued buying new cargoes from Moscow, and some governments have announced that they are imposing bans on petroleum imports from Russia.
Shipments of the two grades have been gradually declining and were planned to be at 170,000 barrels per day next month. However, this number was based on flows from 2020, which are estimated to be around 320,000 barrels per day.
Nigeria is facing significant losses after Shell said it will try to go elsewhere for barrels. Scheduled exports of almost 1.5 million barrels a day this month may be affected. It’s not clear when Eni’s force majeure began, but the company said that Nigeria LNG is also affected. The effect of this will be significant in the market prices of AGO, PMS and DPK.
Source: Oriental News
