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Iran Return Threatens Nigeria’s Export to India, S’Africa

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Iran’s return to an already oversupplied oil market appears set to put further pressure on Nigerian crude oil, which has been struggling to sell in recent times.

Industry analysts have said South Africa’s and India’s imports of Nigerian crude could suffer setbacks, as Iranian oil pushes ahead to regain its lost market share.

The United States and European Union at the weekend lifted key sanctions against Iran, removing constraints that had capped its crude exports at just one million barrels per day over the past four years.

Iran’s Deputy Oil Minister, Roknoddin Javadi, on Monday expressed confidence that the country, which has the fourth largest proven oil reserves in the world, can produce an extra 500,000 bpd.

India, which recently replaced the United States as Nigeria’s biggest market, saw its import of Nigerian crude rise to a peak of 20.37 million barrels in April last year.

Before the sanctions, Iran was India’s second-biggest supplier of oil, but occupied the No. 7 spot in the 2014/15 fiscal year as India curbed annual purchases to 220,000 bpd.

South Africa, which imports more Nigerian crude than any other African country, bought 9.45 million barrels in January 2015, according to data from the Nigerian National Petroleum Corporation.

The Head of Energy Research, Ecobank Capital, Mr. Dolapo Oni, in a telephone interview with our correspondent, said, “Nigeria’s crude will continue to face challenges to sell because other grades are now cheaper and also attractive to buyers. The same revenue implication: lower revenue for the government.

“Iran remains a major threat to us in India, and that could affect trade this year. Before now, traders have had issues selling our cargoes.”

The Executive Director, South African Petroleum Industry Association, Avhapfani Tshifularo, was quoted by Bloomberg as saying, “Iranian imports are likely to displace the Nigerian and Saudi Arabian crudes, since they seem to have filled the gap since South Africa stopped importing Iranian crude oil,” he added.

An economist at FocusEconomics, Robert Hill, said, “Iran will want regain market share it has either lost, or never had access to. This will most likely translate into more supply of high-quality hydrocarbons and downside pressure on prices.”

Punch

CEO/Founder Investors King Ltd, a foreign exchange research analyst, contributing author on New York-based Talk Markets and Investing.com, with over a decade experience in the global financial markets.

Markets

Communities in Delta State Shut OML30 Operates by Heritage Energy Operational Services Ltd

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The OML30 operated by Heritage Energy Operational Services Limited in Delta State has been shut down by the host communities for failing to meet its obligations to the 112 host communities.

The host communities, led by its Management Committee/President Generals, had accused the company of gross indifference and failure in its obligations to the host communities despite several meetings and calls to ensure a peaceful resolution.

The station with a production capacity of 80,000 barrels per day and eight flow stations operates within the Ughelli area of Delta State.

The host communities specifically accused HEOSL of failure to pay the GMOU fund for the last two years despite mediation by the Delta State Government on May 18, 2020.

Also, the host communities accused HEOSL of ‘total stoppage of scholarship award and payment to host communities since 2016’.

The Chairman, Dr Harrison Oboghor and Secretary, Mr Ibuje Joseph that led the OML30 host communities explained to journalists on Monday that the host communities had resolved not to backpedal until all their demands were met.

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Crude Oil Recovers from 4 Percent Decline as Joe Biden Wins

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Oil Prices Recover from 4 Percent Decline as Joe Biden Wins

Crude oil prices rose with other financial markets on Monday following a 4 percent decline on Friday.

This was after Joe Biden, the former Vice-President and now the President-elect won the race to the White House.

Global benchmark oil, Brent crude oil, gained $1.06 or 2.7 percent to $40.51 per barrel on Monday while the U.S West Texas Intermediate crude oil gained $1.07 or 2.9 percent to $38.21 per barrel.

On Friday, Brent crude oil declined by 4 percent as global uncertainty surged amid unclear US election and a series of negative comments from President Trump. However, on Saturday when it became clear that Joe Biden has won, global financial markets rebounded in anticipation of additional stimulus given Biden’s position on economic growth and recovery.

Trading this morning has a risk-on flavor, reflecting increasing confidence that Joe Biden will occupy the White House, but the Republican Party will retain control of the Senate,” Michael McCarthy, chief market strategist at CMC Markets in Sydney.

“The outcome is ideal from a market point of view. Neither party controls the Congress, so both trade wars and higher taxes are largely off the agenda.”

The president-elect and his team are now working on mitigating the risk of COVID-19, grow the world’s largest economy by protecting small businesses and the middle class that is the backbone of the American economy.

There will be some repercussions further down the road,” said OCBC’s economist Howie Lee, raising the possibility of lockdowns in the United States under Biden.

“Either you’re crimping energy demand or consumption behavior.”

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Nigeria, Other OPEC Members Oil Revenue to Hit 18 Year Low in 2020

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Revenue of OPEC Members to Drop to 18 Year Low in 2020

The United States Energy Information Administration (EIA) has predicted that the oil revenue of members of the Organisation of the Petroleum Exporting Countries (OPEC) will decline to 18-year low in 2020.

EIA said their combined oil export revenue will plunge to its lowest level since 2002. It proceeded to put a value to the projection by saying members of the oil cartel would earn around $323 billion in net oil export in 2020.

If realised, this forecast revenue would be the lowest in 18 years. Lower crude oil prices and lower export volumes drive this expected decrease in export revenues,” it said.

The oil expert based its projection on weak global oil demand and low oil prices because of COVID-19.

It said this coupled with production cuts by OPEC members in recent months will impact net revenue of the cartel in 2020.

It said, “OPEC earned an estimated $595bn in net oil export revenues in 2019, less than half of the estimated record high of $1.2tn, which was earned in 2012.

“Continued declines in revenue in 2020 could be detrimental to member countries’ fiscal budgets, which rely heavily on revenues from oil sales to import goods, fund social programmes, and support public services.”

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