The Federal Government of Nigeria has announced that domestic crude oil refiners and other operators in the sector are now permitted to buy crude oil in either naira or dollars.

This move comes as a response to longstanding demands from stakeholders in the industry and is poised to reshape the dynamics of the nation’s oil market.

The announcement was made on Monday through the Nigerian Upstream Petroleum Regulatory Commission during a briefing in Abuja.

According to the commission, the decision to allow the purchase of crude oil in naira or dollars aligns with the provisions of Section 109(2) of the Petroleum Industry Act 2021.

The development of the new template involved collaboration with key stakeholders, including representatives from NNPC Upstream Investment Management Services, Crude Oil/Condensate Producers, Crude Oil Refinery-Owners Association of Nigeria, and Dangote Petroleum Refinery.

Chief Executive of the Nigerian Upstream Petroleum Regulatory Commission, Gbenga Komolafe, said the new template will ensure a seamless implementation of the Domestic Crude Oil Supply Obligation (DCSO) and maintain a consistent supply of crude oil to domestic refineries.

He highlighted that the flexibility to transact in either naira or dollars would alleviate pressure on the country’s foreign exchange rate, potentially benefiting the overall economy.

Responding to inquiries regarding the currency of transaction, Komolafe reiterated that payments could be made in either United States dollars or naira, or a combination of both, as agreed upon in the Sales and Purchase Agreement (SPA) between the producer and the refiner.

This flexibility is expected to ease the financial burden on indigenous refineries and support their sustainability in the face of economic challenges.

The decision comes after modular refineries in Nigeria faced threats of shutdown due to difficulties in accessing foreign exchange for crude oil purchases.

These refineries with a combined capacity of producing 200,000 barrels of crude oil daily, struggled to secure dollars for purchasing crude, which is priced in US dollars.

The Crude Oil Refinery Owners Association of Nigeria had previously expressed concerns over the impact of the foreign exchange crisis on their operations.

Furthermore, alongside the announcement regarding crude oil purchases, the government revealed an increase in the country’s crude oil and condensate reserves to 37.5 billion barrels as of January 1, 2024.

Gas reserves also saw an uptick, reaching 209.26 trillion cubic feet during the same period, signifying substantial potential for future exploration and production activities.

As Nigeria navigates its oil and gas landscape, the decision to allow indigenous refineries to purchase crude oil in naira or dollars marks a significant step towards supporting local industry players and promoting economic stability in the sector.

With the potential to enhance operational efficiency and mitigate financial challenges, this policy shift holds promise for the growth and sustainability of Nigeria’s oil refining sector.

Citigroup Inc. has predicted that the world’s leading safe haven asset, gold will reach $3,000 per ounce.

This announcement comes amidst a significant surge in investor interest in the precious metal, fueled by a myriad of factors ranging from geopolitical tensions to shifting monetary policies.

Analysts at Citigroup, led by Aakash Doshi, have upgraded their estimates for average gold prices in 2024 to $2,350, with a 40% upward revision in their 2025 prediction to $2,875.

They anticipate that trading will regularly test and surpass the $2,500 price level in the latter half of the year.

The rationale behind Citigroup’s optimistic outlook lies in several key factors. Firstly, the expectation of a Federal Reserve interest rate cut has spurred increased investor inflows into gold as historically low interest rates tend to make non-yielding assets like gold more attractive.

Also, ongoing conflicts in regions such as the Middle East and Ukraine have heightened geopolitical uncertainty, further bolstering gold’s appeal as a safe-haven asset.

Furthermore, central banks, particularly those in emerging markets, have been actively accumulating gold reserves, adding to the overall demand for the precious metal.

China, in particular, has demonstrated robust consumer demand for gold, further underpinning Citigroup’s bullish stance.

According to Citigroup analysts, the resurgence of inflows into gold-backed exchange-traded funds (ETFs) has played a significant role in supporting the climb towards the $3,000 mark.

This trend marks a departure from recent years, where such inflows were relatively subdued.

While Citigroup acknowledges the possibility of a pullback in prices around May or June, they anticipate strong buying support at the $2,200 per ounce threshold, suggesting that any dips in price may be short-lived.

The bank’s forecast aligns with sentiments expressed by other major financial institutions. Goldman Sachs Group Inc., for instance, has raised its year-end forecast for gold to $2,700, citing similar factors driving the commodity’s upward trajectory.

UBS Group AG also sees gold reaching $2,500 by the year’s end, further corroborating the bullish outlook shared by Citigroup.

As investors brace for what could be a historic rally in gold prices, Citigroup’s projection serves as a testament to the growing optimism surrounding the precious metal.

With geopolitical tensions simmering and central banks poised to enact accommodative monetary policies, gold appears poised to shine brightly in the months ahead, potentially realizing Citigroup’s ambitious target of $3,000 per ounce.

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.