- Oil Prices Fall as OPEC Fails to Stop Excess Production
Oil prices dipped Tuesday as expectations dimmed of an OPEC agreement to reduce the cartel’s gushing of crude into the massively saturated global market by around a million barrels per day.
Prices were also hit as non-OPEC Russia confirmed it would not send a delegation to the Organisation of the Petroleum Exporting Countries’ meeting in Vienna on Wednesday.
In late morning European trading, US benchmark West Texas Intermediate for delivery in January was down 73 cents a barrel to $46.35, in what market analyst Jasper Lawler at CMC Markets called “heebie-jeebies” on the eve of the talks.
Brent North Sea crude was down 0.72 cents to $47.52.
Analysts expect further falls if OPEC fails to agree on Wednesday its first joint output cut in eight years in an effort to reduce the global glut and so lift prices.
The group’s big players — Saudi Arabia, Iran and Iraq — disagree on what size cuts each member will make, and the cartel wants non-OPEC countries like Russia to reduce production too.
Russia is currently pumping some 11 million barrels per day, a level not seen since Soviet days. Hit hard by the low price and Western sanctions, Moscow has said it is ready to freeze output but not to cut it.
While making life cheaper for consumers and businesses, two years of low prices have wreaked havoc with the public finances of OPEC member states, even in the wealthy Gulf states.
But Iraq and Iran, OPEC’s biggest producers after Saudi Arabia, on Monday continued to express objections to a proposal to cut up to 1.2 million barrels per day from October levels, Bloomberg News reported, citing an OPEC delegate.
In a 10-hour meeting, Iran said it might be ready to freeze production at about 200,000 barrels a day above its current output of around 3.975 million bpd, Bloomberg said.
Saudi Arabia hit back, saying Tehran should freeze its production at just over 3.7 million bpd — more or less its current level.
Iran has consistently said it won’t cut production until it has reached pre-sanctions levels. It is also a fierce regional rival of Saudi Arabia, engaged in a proxy war in Yemen and backing different sides in Syria.
Iraq meanwhile has said it will cut output but that it is short of money needed to fight Islamic State extremists. It also disputes with OPEC the level of its current output.
OPEC kingpin Saudi Arabia added to the pessimism about prospects for a deal on Sunday by appearing to say it could live without an agreement.
Recovering demand, said Energy Minister Khaled al-Falih — due in Vienna later Tuesday — would “stabilise” prices in 2017 anyway.
Prices had made a slight recovery Monday after Iraqi Oil Minister Jabbar al-Luaibi sounded an upbeat note as he arrived in Vienna, saying he was “optimistic” that the 14-country group would strike an accord.
Algeria, which is trying to mediate a deal, on Monday proposed a compromise with Iran capping its production at 3.795 bpd, delegates said, according to Bloomberg.
However, there has been no indication that any such proposal will actually be accepted when the oil ministers meet on Wednesday.
Bjarne Schieldrop, chief commodities analyst at top Nordic corporate bank SEB, said that the chances of an output cut are now “very low”.
The best possible result, at this stage, was that the club would end up with a face-saving deal while “kicking the can to the next OPEC meeting in half a year’s time”, Schieldrop said.
Nigeria-South Africa Trade Hits $2.9bn
The volume of trade between Nigeria and South Africa hit $2.9 billion last year with expectation of it rising further with the African Continental Free Trade Area (AfCFTA) agreement.
Nigeria’s Consul General, Malik Abdul, in a statement noted that Nigeria accounts for 64 per cent of South Africa’s trade in West Africa and is one of his country’s top three sources of crude oil.
He further added that in 2020, South Africa imported R35 billion ($2.48 billion) worth of goods, predominantly crude oil from Nigeria and exported R6 billion ($425milion) to Nigeria.
He stated: “South Africa is currently among the top 10 per cent of investors in Nigeria, globally and Nigeria is South Africa’s 10th biggest export market in Africa and thirty-second globally. Nigeria accounts for 64 per cent of South Africa’s trade with West Africa and is one of South Africa’s top three sources of crude oil.
“Also, Nigeria in 2020 was South Africa’s top import market in Africa and sixth globally, after China, Germany, USA, India and Saudi Arabia. Over the past year, South Africa imported $2.48 billion worth of goods predominantly crude oil from Nigeria and exported $425 million worth to Nigeria.”
Also, the consulate said his embassy issued a total of 10,341 passports to Nigerian citizens in South Africa between March 2020 and May 2021.
The consul general further said the Mission had 404 unclaimed passports, and advised all those whose passports were processed and pending from August 2020 to come for collection.
Abdul added that the consulate was working to clear all COVID-19 lockdown backlog of applications, urging members of the public to exercise patience while the mission was resolving the backlogs.
On the re-introduction of administrative fees and charges for lost passports, Abdul said that the step was taken to harmonise and standardise consular services following approval from the Ministry of Foreign Affairs, Abuja.
The Mission had increased the fees for lost passports from R1,500 to R2,000, and admin charges of R120 for data capturing.
“On this issue, the Mission could not unilaterally impose any charges without headquarters’ approval or consent.
“The admin fees of R120 pertains to all services rendered by the two Missions,” he said.
According to the Nigerian envoy, the decision was taken to remove disparities in all consular services, noting that visa fees have also been harmonised.
On penalty for lost passports, Abdul disclosed that 484 Nigerian passports were reported missing at the mission between August 2020 and May 2021 with request for re-issue.
Abdul said it was discovered that there were criminal undertones and immigration rules infractions associated with the ‘so-called’ lost passport declarations.
“In line with practice in other Missions, there was a need to impose fines to deter people from engaging in such infractions.
“At such an astronomical rate of loss declarations, the option will be to refer such losses to Nigeria for processing.
“This will save the booklet for genuine requests of re-issue and thereby reducing the backlog and pressure on the Mission,” the envoy said.
Abdul disclosed that the consulate had received a directive to embargo processing of lost passports pending further instructions from the headquarters.
The consul general then accused some Nigerian groups in South Africa of, “peddling lies and outright falsehoods” against the Mission and his person.
“These disgruntled elements have gone ahead to incite fellow Nigerians with intent to sabotage the Mission.
“Moreover, a lie and falsehoods often repeated amounts to a propaganda which can be misinterpreted by the gullible and undiscerning as truth,” he said.
NNPC Engages Gas Producers to Improve Power Supply
The Nigerian National Petroleum Corporation (NNPC) has started engaging gas producers across the country in an effort to boost gas supply to power generation companies (Gencos) and subsequently improve electricity supply.
Mr. Yusuf Usman, the Chief Operating Officer, Gas and Power, NNPC, disclosed this in Lagos during his tour of Egbin Power Plc facility on Monday.
Usman, who responded to concerns raised by the Chairman of Egbin Power Plc, Mr. Temitope Shonubi, said the company’s concern on gas supply and transmission restrictions had been noted, adding that the corporation would support it to ensure constant power supply.
“I have listened to all the concerns you raised. An area of concern to me is when you talked about the gas constraints. We are going to support you to make sure that the power supply is steady. We are having a session with gas suppliers in this regard.
“I am aware that works are ongoing in this regard to ensure that all the power we generate is safely evacuated,” Usman said.
Usman, however, said he was impressed by the level of progress being recorded by Egbin, noting that the effort of the company’s management to effect turnaround maintenance at the company through overhaul of the entire system, was commendable.
Usman added: “The visit has been an eye opener for me. We have seen turbines that have been running for over 40 years. We have seen efforts being made by Egbin management to effect a turnaround at the plant through overhaul of the entire system.
“We have also seen the support you have been given to the youths through employment and capacity development opportunities.”
Shonubi, in his remarks, said Egbin Power was planning to increase power generation by 1,900 megawatt.
Shonubi said: “Egbin has 1,320MW capacity. As at the time we took over, the plant was generating 300MW which is abysmal 22 per cent. As at today, our generation capacity has surged and we do 89 per cent.
“We have reached the highest peak of 970MW and we are working hard to ensure sustainability of this feat.
“The 970MW we hit is the highest recorded this year and based on our core value of sustainability, we are working round the clock to make sure that we sustain the gains, which we have made.”
Nigeria’s Inflation Rate Moderates to 17.93 Percent in May
Inflation in Africa’s largest economy, Nigeria, moderated from 18.12 percent year-on-year in April to 17.93 percent year-on-year in May, according to the latest report from the National Bureau of Statistics (NBS).
On a monthly basis, headline inflation grew by 1.01 percent in May. Representing an increase of 0.04 percent when compared to 0.97 percent filed in April.
Core inflation, which excludes the prices of volatile agricultural
produce stood at 13.15 percent in May 2021, up by 0.41 percent when compared with 12.74 percent recorded in April 2021.
On month-on-month basis, the core sub-index increased by 1.24 percent in May 2021. This was up by 0.25 percent when compared with 0.99 percent recorded in April 2021.
The highest increases were recorded in prices of Pharmaceutical products, Garments, Shoes and other footwear, Hairdressing salons and personal grooming establishments, Furniture and furnishing, Carpet and other floor covering, Motor cars, Hospital services, Fuels and lubricants for personal transport equipments, Cleaning, repair and hire of clothing, Other services in respect of personal transport equipments, Gas, Household textile and Non durable household goods.
The average 12-month annual rate of change of the index was 11.50 percent for the twelve-month period ending May 2021; this is 0.25 percent points higher than 11.25 percent recorded in April 2021.
Food index rose by 22.28 percent in the month of May 2021, up by 0.06 percent points from 0.99 percent recorded in April 2021.
The average annual rate of change of the Food sub-index for the twelve-month period ending May 2021 over the previous twelve-month average was 19.18 percent, 0.60 percent points from the average annual rate of change recorded in April 2021 (18.58) percent.
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