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Shipowners Pay More on Nigerian Waters

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Shipowners

Tankers moving through the Gulf of Guinea in West Africa are paying additional insurance premiums, compared with relatively safe sea lanes, due to escalation of piracy incidents and sea robberies in Nigeria and others.

Additional premiums have to be paid by shipowners if their ships move through, load or discharge cargoes from this region, Intertanko’s London-based Marine Director, Phillip Belcher, was quoted by Platts to have said on the sidelines of the International ‘Safety at Sea’ conference in Singapore.

According to him, these premiums have to be paid because Nigeria and a major chunk of the Gulf of Guinea are among the listed areas — for hull war, piracy, terrorism and related perils — of the Joint War Committee of the Lloyd’s Markets Association, which comprises  underwriting representatives.

Pirate attacks off the coast of Nigeria rose in the first half of the year, while attacks on shipping globally fell to their lowest level for 21 years, according to the International Chamber of Commerce’s International Maritime Bureau.

Nigerian pirates kidnapped 24 crew members in the first half of this year, up from just 10 in the first six months of 2015, the IMB said.

It said these incidents were “increasingly violent”, with Nigerians accounting for eight of the nine incidents worldwide in which ships were fired on in the January-June period.

Belcher said all shipowners whose vessels were passing through the Gulf of Guinea had to notify the insurer of the measures being taken to mitigate the risk and accordingly the premiums are finalised on a case by case basis.

Nigeria’s problems are not restricted to piracy and offshore robberies alone.

According to market sources, West African crude loading has taken a severe beating due to the unrest in Nigeria.

A few weeks ago, Shell’s Nigerian unit declared force majeure for Bonny Light crude liftings. A month earlier, the company ended its force majeure due to another leak on the same pipeline.

Nigeria’s crude output is at its lowest levels in 30 years. Forcados, Brass River and Qua Iboe grades have all been impacted by dreaded attacks and sabotage by terrorists, according to shipping industry officials and analysts. Compared with the beginning of the year, crude loadings in Nigeria are down by 500,000 barrels per day, they said.

Theoretically, this translates into disappearance of demand for one Suezmax every two days or 15 Suezmaxes a month, they added.

A Suezmax typically carries one million barrels of crude and is a popular mode for transporting cargoes from West Africa.

“We are closely monitoring the situation and will be very concerned if current criminal activities [around Nigeria] become a political football,” said Belcher.

A few years ago when piracy in the Gulf of Aden was at its peak, strategic experts had expressed similar concerns over potential linkages with Islamist terrorism in Somalia, though eventually no such major nexus was unravelled.

“Governments [in the region] should take all measures to provide security to ships moving in the region and if they can’t, they should allow private agencies to do so,” he said.

At least two or three protected anchorages have been set up close to the ports in the Gulf of Guinea where ships are provided security by private armed guards, Belcher said.

Countries along the Gulf of Guinea do not permit private armed guards from outside on board the ships when they are in their territorial waters.

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

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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Crude Oil

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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Geopolitical Uncertainty Drives Gold Prices Higher Despite Fed Rate Cut Concerns

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As tensions simmer in the Middle East and concerns loom over Federal Reserve policy, gold continues its upward trajectory, defying expectations and reinforcing its status as the ultimate safe-haven asset.

The latest surge in gold prices comes amidst escalating geopolitical tensions in the Middle East.

Reports suggest that the United States and its allies are bracing for potential missile or drone strikes by Iran or its proxies on military and government targets in Israel. Such a significant escalation in the six-month-old conflict has sent shockwaves through financial markets, prompting investors to seek refuge in gold.

Despite initial setbacks earlier in the week, gold resumed its blistering rally, buoyed by the specter of geopolitical uncertainty.

On Wednesday, the precious metal witnessed its most significant decline in almost a month following a hotter-than-expected US inflation readout.

This unexpected data led traders to recalibrate their expectations for Federal Reserve interest rate cuts this year, causing the yield on 10-year Treasuries to surge above 4.5%.

However, gold’s resilience in the face of shifting market dynamics remains remarkable. Even as concerns mount over the Fed’s rate-cutting trajectory, the allure of gold as a safe-haven asset persists.

Prices hover just shy of a record high reached earlier in the week, propelled by robust buying from central banks.

Market analysts interviewed by Bloomberg anticipate further gains in gold prices, citing continued geopolitical tensions and strong momentum in the market.

The precious metal’s near-20% rally since mid-February underscores its enduring appeal as a hedge against uncertainty and inflationary pressures.

At 9:54 a.m. in Singapore, spot gold rose 0.3% to $2,341.58 an ounce, signaling continued investor confidence in the metal’s resilience.

The Bloomberg Dollar Spot Index, meanwhile, remained relatively unchanged near its highest level since November.

Silver, often considered a bellwether for precious metals, held steady after reaching a three-year high, while platinum and palladium also registered gains.

As the world navigates through a complex web of geopolitical tensions and economic uncertainties, gold remains a beacon of stability in an increasingly volatile landscape.

Its ability to weather market fluctuations and maintain its allure as a safe-haven asset reaffirms its timeless appeal to investors seeking refuge amidst uncertainty.

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