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Kerosene Supply: 78 Marketers May Demand Refund of Payments from NNPC

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Kerosene

Marketers of petroleum products who paid the Nigerian National Petroleum Corporation (NNPC) for supply of kerosene but could not get the product may seek for the refund of the payments.

Investigation revealed that about 78 marketers and depot owners paid the Pipeline and Products Marketing Company (PPMC), a subsidiary of the NNPC for supply of kerosene and petrol from imported vessels.

Apart from the marketers and depot owners who paid for direct supply from the PPMC vessels, it was also gathered that over 2,000 bulk buyers of the product have also paid for supply from the depots that have throughput arrangement with the PPMC.

According to some of the marketers who spoke to journalists at the weekend, some of these payments were made since 2015 but the marketers are yet to receive supply.

“We have two categories of people whose money has been trapped since last year. One group is the depot owners and other marketers who paid to load direct from the PPMC vessels. I paid over N900 million and PPMC has not refunded the money and has not supplied the product. The second category of the people buy in bulk from the depots that have throughput arrangement with the PPMC. Over 2,000 people paid,” one of the marketers explained on condition of anonymity.

Another marketer who spoke on the issue told journalists that about N35 billion was paid by the marketers for the supply of kerosene alone, while some people also paid for the supply of petrol.

“We had to depend on the NNPC for kerosene and to some extent, petrol because of the challenges of getting foreign exchange. The minister of petroleum tried his best to make dollar available through the international oil companies (IOCs) but the IOCs are no longer giving us at the official price. If you buy dollar above N285, you will not have any margin. That is why the companies relied on the PPMC. About N35 billion was paid by the marketers for kerosene but nobody has been refunded. Now, our banks have swooped on us,” he said.

Journalists also gathered that the next kerosene consignment to be imported from PPMC was yet to arrive Lagos, a week after the vessel was supposed to have arrived.

The 10,000 metric tonne-capacity vessel will be shared by Honeywell, Aiteo and NIPCO Plc.

It was further learnt that over 2,000 people paid to buy the product in bulk while the vessel will contain only about 200 trucks.

While the next consignment is being awaited, the PPMC has since moved up the official price to N135 from N73 per litre.

However, the public who are the end users would not be losing much as the product had always sold above the N73 official price because of racketeering by officials of PPMC and the marketers.

In the massive scam, officials of PPMC allocated the product to marketers at ex-depot price of N73 per litre, while the marketers sold to the public at over N180 per litre.

But some independent marketers, who could not get allocation from the PPMC had alleged that some officials of PPMC collected bribe of N1 million on every truck of kerosene allocated to the marketers at N73 per litre.

Is the CEO/Founder of Investors King Limited. A proven foreign exchange research analyst and a published author on Yahoo Finance, Businessinsider, Nasdaq, Entrepreneur.com, Investorplace, and many more. He has over two decades of experience in global financial markets.

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Crude Oil

Oil Prices Dip Amidst Middle East Tensions, Market Reaction Limited

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Oil

Oil prices fell on Monday as market participants reevaluated their risk premiums in the wake of Iran’s weekend attack on Israel, which the Israeli government said caused limited damage.

Brent crude oil, against which Nigerian oil is priced,  dipped by 50 cents, or 0.5%, to $89.95 a barrel while West Texas Intermediate (WTI) oil fell by 52 cents, or 0.6%, to $85.14 a barrel.

The attack, involving over 300 missiles and drones, marked the first assault on Israel from another country in more than three decades. It heightened concerns over a potential broader regional conflict impacting oil traffic through the Middle East.

However, Israel’s Iron Dome defense system intercepted many of the missiles, and the attack resulted in only modest damage and no reported loss of life.

Warren Patterson, head of commodities strategy at ING, noted that the market had largely priced in the potential attack in the days leading up to it. The limited damage and the absence of casualties suggest that Israel’s response may be more measured, which could help stabilize the oil market.

Iran, a major oil producer within OPEC, currently produces over 3 million barrels per day (bpd) of crude oil. The potential risks include stricter enforcement of oil sanctions and the possibility of Israeli targeting of Iran’s energy infrastructure, according to ING.

Nevertheless, OPEC possesses over 5 million bpd of spare production capacity, which could help mitigate any supply disruptions.

Analysts from ANZ Research and Citi Research have suggested that further significant impact on oil prices would require a material disruption to supply, such as constraints on shipping in the Strait of Hormuz. So far, the Israel-Hamas conflict has not had a notable effect on oil supply.

The market remains watchful of Israel’s response to the attack, which could influence the future trajectory of oil prices and broader geopolitical tensions in the region.

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Nigeria’s Crude Oil Production Falls for Second Consecutive Month, OPEC Reports

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Crude Oil

Nigeria’s crude oil production declined for the second consecutive month in March, according to the latest report from the Organization of Petroleum Exporting Countries (OPEC).

Data obtained from OPEC’s Monthly Oil Market Report for April 2024 reveals that Nigeria’s crude oil production depreciated from 1.322 million barrels per day (mbpd) in February to 1.231 mbpd in March.

This decline underscores the challenges faced by Africa’s largest oil-producing nation in maintaining consistent output levels.

Despite efforts to stabilize production, Nigeria has struggled to curb the impact of oil theft and pipeline vandalism, which continue to plague the industry.

The theft and sabotage of oil infrastructure have resulted in significant disruptions, contributing to the decline in crude oil production observed in recent months.

The Nigerian National Petroleum Company Limited (NNPCL) recently disclosed alarming statistics regarding oil theft incidents in the country.

According to reports, the NNPCL recorded 155 oil theft incidents within a single week, these incidents included illegal pipeline connections, refinery operations, vessel infractions, and oil spills, among others.

The persistent menace of oil theft poses a considerable threat to Nigeria’s economy and its position as a key player in the global oil market.

The illicit activities not only lead to revenue losses for the government but also disrupt the operations of oil companies and undermine investor confidence in the sector.

In response to the escalating problem, the Nigerian government has intensified efforts to combat oil theft and vandalism.

However, addressing these challenges requires a multi-faceted approach, including enhanced security measures, regulatory reforms, and community engagement initiatives.

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Oil Prices Edge Higher Amidst Fear of Middle East Conflict

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Crude Oil

Amidst growing apprehensions of a potential conflict in the Middle East, oil prices have inched higher as investors anticipate a strike from Iran.

The specter of a showdown between Iran or its proxies and Israel has sent tremors across the oil market as traders brace for possible supply disruptions in the region.

Brent crude oil climbed above the $90 price level following a 1.1% gain on Wednesday while West Texas Intermediate (WTI) hovered near $86.

The anticipation of a strike, believed to be imminent by the United States and its allies, has cast a shadow over market sentiment. Such an escalation would follow Iran’s recent threat to retaliate against Israel for an attack on a diplomatic compound in Syria.

The trajectory of oil prices this year has been heavily influenced by geopolitical tensions and supply dynamics. Geopolitical unrest, coupled with ongoing OPEC+ supply cuts, has propelled oil prices nearly 18% higher since the beginning of the year.

However, this upward momentum is tempered by concerns such as swelling US crude stockpiles, now at their highest since July, and the impact of a hot US inflation print on Federal Reserve rate-cut expectations.

Despite the bullish sentiment prevailing among many of the world’s top traders and Wall Street banks, with some envisioning a return to $100 for the global benchmark, caution lingers.

Macquarie Group has cautioned that Brent could enter a bear market in the second half of the year if geopolitical events fail to materialize into actual supply disruptions.

“The current geopolitical environment continues to provide support to oil prices,” remarked Warren Patterson, head of commodities strategy for ING Groep NV in Singapore. However, he added, “further upside is limited without a fresh catalyst or further escalation in the Middle East.”

The rhetoric from Iran’s Supreme Leader, Ayatollah Ali Khamenei, reaffirming a vow to retaliate against Israel, has only heightened tensions in the region.

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