Over a month ago we declared, somewhat tongue-in-cheek, that the group that “holds the price of oil in their hands” is the quixotic, and formerly completely unknown Nigerian militant group the Niger Delta Avengers, or NDA, whose generous source of funding remains to this day unknown (although one can make some very astute assumptions as to who would benefit from the price of oil rising as a result of relentless supply disruptions).
In retrospect, our snarky take on the NDA’s impact on the price of oil was not exagerated, because just a few days later Goldman said that it was the NDA’s relentless and ongoing attacks on Nigerian oil infrastructure that were the biggest catalyst to not only surging supply disruptions, but also the higher price of oil.
Then, just last week, in the aftermath of the NDA going rather quiet, Goldman once again chimed in, this time predicting that the recently signed “tentative” ceasefire between the Nigerian government and the NDA could lead to downside risk to the bank’s $50 target (i.e., Goldman was now axed lower):
In a region with a history of violent interruptions, the oil infrastructure in the Niger Delta is suffering through another string of attacks by local militias. Mostly carried out by a group called the Niger Delta Avengers (NDA), these attacks likely reduced crude production by mid-June by 400 kb/d in addition to 200 kb/d of non-militia related disruptions. On June 20, the government announced a 30-day ceasefire with a number of militias including the NDA. And while the NDA commented that it “does not remember having [such] an agreement”, there have been no attacks since June 16 and on Monday June 27, the government announced that production had recovered by 200 kb/d to 300 kb/d. If sustainable, this ceasefire would pave the way for higher output, with the government optimistically aiming for a return to normal production by end-July. A normalization in production, even over several more months, would create downside risk to our $50/bbl 2H16 price forecast as it would bring the global oil market close to balance over that time period.
And then, things reverted back to “normal” overnight when the far more violent NDA which we know and love, again reemerged, if only on Twitter, where the militants claimed attacks on 5 crude-pumping facilities overnight Sunday. This alleged violation prompted markets to assume that any Nigerian ceasefire, tentative or otherwise, was now null and void, and that as much as 600,000 bpd of supply would once again be curtailed, in turn sending the price of oil modestly higher.
This Day later reported that “the relative peace that attended the federal government’s offer of dialogue-for-peace initiative to the militant group in the Niger Delta, the Niger Delta Avengers (NDA), snapped at the weekend as the group resumed hostilities breaching major crude oil pipelines in parts of Delta State. The militant group yesterday said it had bombed Chevron’s two major oil wells 7 and 8 close to Abiteye flow station in Warri South West Local Government Area of the state.”
Although there was no official confirmation last night, a top security source told THISDAY that the incidents occurred. “I just spoke with my men in the area and they confirmed the attack,” the source said, adding: “Preliminary investigations so far from our men in the field is that dynamite was used to blow up the facilities just like in previous attacks.”
The militant group reported through its tweeter handle late Saturday at 11:26 pm that its strike team had blown up two major crude oil trunk lines belonging to the Nigerian Petroleum Development Company (NPDC) close to Batan flow station in the oil-rich state.
At 11:30 pm of Saturday, the avengers also tweeted that it blew up the Nigerian National Petroleum Corporation (NNPC) Crude Oil Trunk Line to Warri Refinery at 9:15p.m on Friday.
Continuing, the group tweeted thus: “At 11:26pm on Saturday @NDAvengers blew up two NPDC major crude trunk lines close to Batan flow station in Delta state. At 1:15am on Sunday @NDAvengers blew up two major Chevron Oil Wells. WELL 7 and WELL 8 close to Abiteye flow station in Delta state.
“All Five Operations were carried out by @NDAvengers Strike Team. Well Done Soldiers.”
None of this was unexpected, and has been in fitting with the NDA’s modus operandi to date. Yet, a big surprise emerged just a few hours ago, when Twitter did something it has not done before: it suspended the (unconfirmed) account of the Niger Delta Avengers:
What is very surprising about this move is that Twitter had no problem with the NDA’s account for the past 2 months when the millitants were announcing the destructive exploits on Twitter, often without official confirmation, and often resulting in spikes in crude oil (as their tweets would be without fail indicative of further Nigerian oil infrastructure damage). And yet, something changed in the past week, just days after Goldman created a narrative in which the NDA would no longer be an upside price catalyst and, if anything, lead to the unwind of the “production disruption” trade.
Why do it now? According to Bloomberg, Twitter’s press office didn’t immediately reply to an email seeking comment, however we will be very curious to see the official explanation as to who may have complained about the NDA’s account, and just who is no longer axed in a way to benefit from further NDA-induced oil upside.
Finally, a bigger question is whether whoever is providing the funding for the NDA is about to yank it: as we noticed recently, the group’s website recently was inexplicable moved from a .com to a .org website (it can be found here). If and when this site finally goes dark, one can make the assumption that whoever was behind the NDA has officially had enough and that the Nigerian supply disruptions are now indeed over.
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