Oil traders face lower profits or potential losses as a petrol glut of around 1 million tonnes builds offshore Nigeria due to a dispute over a cut in petrol subsidies, which labour called off Monday.

Around 30 vessels are now waiting to offload their gasoline cargoes, or just under 1 million tonnes of the refined product, according to trade sources. The product glut would have a market value of under $900 million, according to Reuters calculations based on benchmark European prices.

Exporters have been unable to offload fuel cargoes into Nigerian ports as strikes, which started about two weeks ago, shut down the country.

President Jonathan on Monday made concessions to the protesters by partly reinstating the subsidy to cut the price of petrol to N97 naira ($0.60) a litre, prompting the unions to suspend strikes.

The gasoline cargoes are still being kept offshore, however, due to the uncertainty surrounding the negotiations, as operators choose to wait and see before redirecting the product elsewhere.

Traders face thinning margins on their exports to Nigeria due to the subsidy cuts, details of which are still being worked out, together with additional demurrage charges due to the offloading delays.

“Companies do face reduced margins. A lot of the smaller companies – the briefcase companies – will fall away,” one gasoline trader said.

Nigeria is Africa’s largest crude producer but is dependent on gasoline imports because of the poor quality of its refining infrastructure.

Trade sources said it would be difficult to send Nigerian-specification gasoline (RON 91 with 1,000 parts per million of sulphur) to other markets. In the past, the gasoline could have been redirected to Libya, according to a source, but such a move would further dent profitability.

“Who else is going to consume so much in West Africa? People waiting there have a huge issue on their hands,” the trader said. He is holding the next couple of cargoes that he had been about to send there. “I’m not loading them and looking for other outlets.”

Nigeria, the most populated country in Africa, can consume much more gasoline than neighbouring countries.

“Currently all is still on hold,” the trader said. “No one is discharging into the depot. There are no loadings at the depot – just what was stocked at the retail outlets.”

“Basically Jonathan has come out with a proposal of 97 (naira per litre) but it is not 100 percent agreed. There is no clear picture,” the trader said.

The market has been waiting for clarity since the president’s surprise move at New Year. Traders said the country had shut down before they could get any confirmation as to how the new regime would work.

“It’s all up in the air at the moment – ‘watch this space’ type of thing,” another trader said.

Under the new regime it was envisaged that the Petroleum Products Pricing Regulatory Agency would regulate the price at the pumps and impose a ceiling every two weeks, trade sources said.

Traders with an import licence would be allowed to bring in petrol and sell it at the maximum retail price allowed, they said, replacing the previous system of quarterly allocations allotted to various suppliers.

Demand was immediately hit by the protests, which hindered traffic.

“Aviation may be a problem, but there is less (road) traffic. Not many people are driving right now … I am hearing that there are soldiers deployed on the streets. Movement is still limited but there are no more street protests,” another trader said.

JBC Energy analysts estimate that even if the government decides to reintroduce a lower-scale subsidy, gasoline demand in the country would fall by 8.5 percent in 2012 to 133,000 barrels per day, following a decline of 7.8 percent in 2011.