OIL MARKETS

OIL MARKETS

This blog is an indepth  and frequently critical analysis of topical issues in the global oil markets  as they relate to Nigeria

 

 An analysis on global oil market and how they effect Nigeria's economic and financial well being. Nigeria's economy is inextricably linked to these markets and the decisions key actors take to safeguard  and promote their own economic objectives. Nigeria principally seeks to excersize its own influence on the global stage through its membership of OPEC. But just how effective is OPEC? Do the key actors share similar policy objectives or political alignments with Nigeria. Has OPEC+ (inclusion of Russia) altered the organisations focus?

The blog also analyses the broader issues in respect of fossil fuels, geopolitical events and their ramifications for Nigeria. We critique the Nigerian government policy decision making and other legislation and the effect it has on Nigeria's prosperity

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Saudi Arabia made what has been described as a surprise announcement, it will voluntarily deepen its crude oil output cuts. The announcement stated that this voluntary output cut would take effect from June . The cut is an additional 1 million barrels per day which will reduce Saudi production to the lowest level in 18 years. The ostensible reason given by the Saudis is to hasten a recovery from the crash in oil price benchmarks which has pitched them into austerity. According to Energy Minister Abdulaziz bin Salman Al Saud, Saudi Arabia wanted to be ahead of the curve. " We want to expedite the process of returning back to normal ... demand is picking up. We want to make sure that we are helping to expedite the equilibrium between the supply and demand,” he told Reuters in a telephone interview. “We are taking a proactive role and we are encouraging others to do the same,” he said, adding that Riyadh’s deeper cuts are “not conditional or restricted to us alone”. The Saudi government's actions are far from altruistic and really should not be a total surprise. They, the Kuwaitis and the Emiratis understand price recovery is a function of…
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The Nigerian national oil company has eventually come to its senses and arrived at the position every other rational actor in the industry has advocated and postponed the full blown Oil bid round which was announced last month as scheduled to take place within 2 weeks. Vaulting ambition is a fine thing, but without intelligence it is destined to be abject failure. Mallam Mele Kyari the boss of the national oil company NNPC has realised just how preposterous the plan to conduct a full blown bid round is at a time like this . In a statement released a few days ago, he belatedly recanted and acknowledged " Where you require foreign investment … this is not a good time,” , adding “the appetite would be very very low”. It is difficult to decide when appraising Mallam Kyari's statements whether to deride him for his socratic wisdom or applaud him for his seemingly effortless ability to volte face when concocting policy statements. Though on this occasion the original announcement was made by Chief Timipre Sylva the Minister of State in April and such a decision must have come from President Buhari or had his blessing. The Minister of State had…
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The IMF have approved US$3.4 billion in emergency financial assistance to the Nigerian Government under the Rapid Financing Instrument to support the authorities’ efforts in addressing the severe economic impact of the COVID-19 shock and the sharp decline in oil prices. The funding is a loan which attracts low interest and needs to be paid back within 5 years. Nigeria, Africa’s largest oil exporter, told the IMF in a letter requesting emergency financial assistance that the drop in oil prices, which provide more than half of government revenue, and the economic shocks related to the new coronavirus left it with an external financing gap of $14 billion. In the detailed brief related to that decision, released on Wednesday, the IMF warned that Nigeria remained exposed to rising risks, particularly in oil markets. Nigeria is also seeking additional funds from the World Bank, the African Development Bank, the Islamic Development Bank and Afreximbank, the IMF noted. An article published by Reuters on Wednesday cited the IMF forecasting a decline of at least $26.5 billion in revenues Nigeria were expected to earn from oil and gas exports as demand destruction created by the COVID-19 pandemic has destroyed oil markets and cratered oil…
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Nigerians have been told they are resilient, as if they have a choice. A flattery conceived to beguile the masses living in abject poverty. Often repeated by a well fed political class that have garnered enough wealth to insulate themselves from the harsh vagaries of the Nigerian existence. The resilience fallacy is a dangerous fable which is an affront to the over one hundred million Nigerians that exist on less than US $1per day, thus constituting the largest group of people living in extreme poverty on the planet. This self-same elite through a mixture of corruption, ineptitude and abuse has mismanaged Nigeria's collective natural resource endowment and led the Nigerian people yet again to the brink of catastrophe . This time laid bare by COVID-19 a black swan nobody saw coming. Now Nigerians really have to be resilient as the collapse in global oil prices has abruptly choked off the oil receipts which the Nigerian Government depend on for over 90% of their foreign exchange earnings. It could not be more ironic, at a time most Nigerians are suffering from having nothing, the thing they have too much of (oil) has caused a price crash that has amplifies their penury.…
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