West Africa's Dalia Crude: Navigating Lower Offers and Limited June Deals in a Volatile Market

The West African crude market is grappling with a confluence of challenges in early 2025, exemplified by the declining price trajectory of Angola’s Dalia crude and the scarcity of June 2025 export deals. While Dalia, a heavy, sweet grade prized for its low sulfur content, has historically been a sought-after feedstock for Asian refineries, structural and geopolitical hurdles are now testing its resilience. This article explores the factors driving reduced offers, the implications for market dynamics, and what investors should watch in the coming months.

The Decline in Dalia Offers: Supply-Side Constraints

Angola’s Dalia crude has seen its premium over Brent shrink amid stagnant production and underinvestment. Output averaged just 1.1 million barrels per day (b/d) in 2023—far below the 1.8 million b/d target set by state-owned oil company Sonangol. Chronic delays in infrastructure upgrades, coupled with OPEC+ production cuts, have limited Angola’s ability to boost supply.

The situation is exacerbated by regional instability. While Nigeria’s oil theft crisis—costing up to 400,000 b/d—does not directly impact Angolan output, it heightens geopolitical risks and discourages long-term contractual commitments. Buyers remain wary of locking in June 2025 deals without guarantees of supply reliability.

Market Dynamics and Competing Crudes

Dalia’s declining competitiveness stems from global market shifts. Asian refiners, traditionally its largest buyers, are increasingly turning to cheaper alternatives:
- Brazilian Crudes: Post-U.S. sanctions, premiums for Brazilian grades rose 50% since early 2024, making them a cost-effective substitute.
- Russian and Middle Eastern Supplies: Redirected flows to Asia, aided by logistical advantages, are squeezing Dalia’s market share.
- U.S. Crudes: Despite tariffs, U.S. exports to Asia rose 15% in 2024, offering lighter, sweeter blends that appeal to refiners.

Meanwhile, Platts assessments for West African crudes—typically referenced 25–55 days forward—now reflect reduced demand urgency. Asian buyers, now prioritizing shorter-term contracts, have left June 2025 deals thinly traded.

Regulatory and Refining Challenges

The IMO’s 2020 sulfur cap initially bolstered demand for Dalia’s low-sulfur profile. However, margin compression at European and U.S. refineries—operating at 82% and 86% capacity, respectively—has dampened appetite for heavy feedstocks. Asian refineries, though still key buyers, face their own pressures:
- Chinese Tariffs: Beijing’s 10% levy on U.S. crude has redirected flows to Canadian and Brazilian grades, further sidelining Dalia.
- Sanctions Risks: Ongoing U.S.-China trade disputes have pushed refiners like Shandong Yulong Petrochemical toward shorter-term deals, avoiding long-term exposures to geopolitical volatility.

Data-Driven Insights

The data reveals a stark divergence: while Brent held above $70/barrel in early 2025, Dalia’s price dipped to $62/barrel by March, reflecting its eroded premium. Analysts attribute this to a 20% drop in demand from European refineries and a 30% surge in Russian crude exports to Asia.

Investment Considerations

1. Upside Risks:
2. A rebound in global economic growth could lift crude prices broadly.

3. Angola’s potential to attract foreign investment—though historically slow—might unlock new production capacity.

4. Downside Risks:

5. Continued underinvestment in Angolan infrastructure could perpetuate supply bottlenecks.
6. Nigeria’s oil theft crisis risks spilling over into regional instability, deterring investment.

Conclusion

West Africa’s Dalia crude faces a pivotal crossroads in 2025. With output constrained by structural underinvestment, geopolitical risks, and stiff competition from global rivals, the scarcity of June deals underscores a market losing confidence. While Dalia’s low sulfur content retains niche appeal, its future hinges on Angola’s ability to modernize its oil sector and stabilize production. Investors should closely monitor Platts assessments, U.S.-China trade tensions, and the EIA’s projection of $75/barrel crude prices—a level that could incentivize both buyers and sellers to bridge the gap in forward markets. Without transformative changes, Dalia’s role in global refining may continue to shrink, leaving its once-robust premium as a relic of a bygone era.