Congolese, Angolan crude differentials fall on freight costs, competitively-priced alternatives

A perfect storm of elevated shipping costs and cheaper alternative crudes landing in Asia has seen demand for eastern-facing West African grades dive in tandem with cash differentials, market sources told Platts.

Traders of WAF crude have pointed to China's laissez-faire approach to buying the region's crude for its March-loading cycle as the key culprit behind the bearish skew in the market, in addition to buyers having to bear the brunt of elevated freight rates on the largest of ship classes.

Angolan and Congolese crudes are typically traded free-on-board, meaning buyers bear the cost of transportation, and are usually shipped into Asia on Very Large Crude Carriers.

Platts, part of S&P Global Energy, assessed the Dirty West Africa-Far East 260,000 mt fixture between w124 and w126 across Jan. 30 to Feb. 4, the strongest assessments seen for the route since November 2022.

"Medium heavy crudes are obviously having a problem... with freight and structure given a strong Dated market," said one London-based WAF crude trader on Feb. 4, adding, "The Chinese are playing it slow with Venezuelan and potentially more Russian coming their way, and India is getting offered a load of cheap Middle Eastern crude."

The stagnating demand for Angolan and Congolese crudes was demonstrated in the Platts Market on Close assessment process on Feb. 4, with two cargoes of signature Congolese grade Djeno and an Angolan Pazflor stem offered through the session.

TotalEnergies offered the Djeno cargoes, with respective loading dates of March 14-15 and March 22-23, at discounts of $4.60/b and $4.40/b to the global benchmark Dated Brent, which were left outstanding at the day's close.

Equinor offered a March 10-11 loading Pazflor clip down to a $2.65/b discount to Dated Brent, which was also left outstanding at the close. The previous session on Feb. 3 saw TotalEnergies sell a cargo of Angola's Dalia crude, which is typically seen by the market at parity to Pazflor, to Unipec at a $2.50/b discount to Dated Brent.

Platts assessed Djeno at a $4.565/b discount to Dated Brent on Feb. 4, by 31.5 cents/b lower day over day and represents the softest assessment for the grade since April 2023. Pazflor was assessed by Platts at a $2.495/b discount, down by 40 cents/b from the previous day and at its softest December 2023.

"Large producers are revising offers down on all their indications by about 50 cents/b, the market is under pressure," said an Americas-based WAF crude trader.

Market sources said there remained a hefty volume of unsold March-loading Angolan crude in the absence of a sustained period of buying from Chinese refiners. April-loading schedules are anticipated in around ten days' time.