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Economy

Oil Prices Rise After US Strikes on Syria

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Oil prices rallied on Friday after the United States launched a missile strike against Syria, sparking fears that an escalation of the conflict in the crude-rich Middle East could disrupt supplies.

Both main contracts jumped more than two percent to their highest levels in a month after US President Donald Trump ordered an assault in retaliation for a chemical attack in Syria that Washington blamed on Damascus.

After benchmark contract Brent struck $56.08 per barrel and WTI $52.94, gains were pared through the day.

By 1100 GMT, Brent North Sea crude for delivery in June was up 35 cents at $55.29 per barrel compared with Thursday’s close.

The US benchmark West Texas Intermediate for May won 48 cents at $52.18.

“The situation remains fluid in Syria at the moment as the implications of the massive cruise missile strike from the United States get digested,” said Oanda senior market analyst Jeffrey Halley.

“Among the most pressing questions will be: is this a one-off attack and are other nations going to join in? What will be the response of Iran and Russia — two of the world’s largest oil producers and staunch allies of the Assad regime?”

Sukrit Vijayakar of Trifecta Consultants said the crude oil market is likely to hold on to gains over the next few months.

“For now, early this morning they have been given a fillip as news of the US firing missiles at Syria has propelled prices higher by over one dollar a barrel,” he said.

The military strike ordered by US president Donald Trump targeted radars, aircraft, air defence systems and other logistical components at a military base south of Homs in central Syria.

The attack comes two days after a suspected sarin attack ordered by President Bashar al-Assad, which Trump has described as “very barbaric”.

While Syria is not a major oil producer, it borders Iraq, OPEC’s second-largest crude producer.

Oil prices have struggled to hold above $51 a barrel owing to concerns about an OPEC-led output cut put in place in January as part of a drive to address a global supply glut and overproduction.

There are worries also that prices above $50 will encourage US shale producers to ramp up production as it becomes more cost-effective.

“With the oversupply concerns still a dominant theme in the oil markets, extreme upside gains may be limited,” said FXTM research analyst Lukman Otunuga.

A world supply glut of crude hammered prices from highs of more than $100 per barrel in June 2014 to near 13-year lows below $30 in February 2016.

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.

Economy

COVID-19 Vaccine: Crude Oil Extends Gain to $48 Per Barrel on Wednesday

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Oil prices rose further on Wednesday as hope for an effective COVID-19 vaccine and the news that the United States of America’s President-elect, Joe Biden has begun transition to the White House bolstered crude oil demand.

Brent crude oil, a Nigerian type of oil, gained 1.63 percent or 78 cents to $48.64 per barrel at 11:50 am Nigerian time on Wednesday.

The United States West Texas Intermediate (WTI) crude oil rose by 1.36 percent or 61 cents to $45.52 per barrel.

OPEC Basket surged the most in terms of gain, adding 3.16 percent or $1.37 to $44.75 per barrel.

This was after AstraZeneca, Moderna and Pfizer-BioNTech announced the positive results of their trials.

Moderna and Pfizer had claimed over 90 percent effective rate in trials while AstraZeneca said its COVID-19 vaccine was 70 percent effective in trials but could hit 90 percent going forward.

The possibility of having a vaccine next year increases the odds that we’re going to see demand return in the new year,” said Phil Flynn, senior analyst at Price Futures Group in Chicago.

Also, the decision of President-elect Joe Biden to bring Janet Yellen, the former Chair of Federal Reserve, back as a Treasury Secretary of the United States is fueling demand and strong confidence across global financial markets.

President-elect Biden’s cabinet choices, particularly Janet Yellen’s Treasury Secretary position, are adding to upside momentum across a broad space of asset classes,” said Jim Ritterbusch of Ritterbusch and Associates.

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Economy

Seyi Makinde Proposes N266.6 Billion Budget for Oyo State in 2021

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The Executive Governor of Oyo State, Seyi Makinde, has presented the Oyo State Budget Proposal for the 2021 Fiscal Year to the Oyo State House of Assembly on Monday.

The proposed budget titled “Budget of Continued Consolidation” was said to be prepared with input from stakeholders in all seven geopolitical zones of Oyo state.

Governor Makinde disclosed this via his official Twitter handle @seyiamakinde.

According to the governor, the proposed recurrent expenditure stood at N136,262,990,009.41 while the proposed capital expenditure was N130,381,283,295.63. Bringing the total proposed budget to N266,6444,273,305.04.

The administration aimed to implement at least 70 percent of the proposed budget if approved.

He said “The total budgeted sum is ₦266,644,273,305.04. The Recurrent Expenditure is ₦136,262,990,009.41 while the Capital Expenditure is ₦130,381,283,295.63. We are again, aiming for at least 70% implementation of the budget.”

He added that “It was my honour to present the Oyo State Budget Proposal for the 2021 Fiscal Year to the Oyo State House of Assembly, today. This Budget of Continued Consolidation was prepared with input from stakeholders in all seven geopolitical zones of our state.”

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Economy

World Bank Expects Nigeria’s Per Capita Income to Dip to 40 Years Low in 2020

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The World Bank has raised concern about Nigeria’s rising debt service cost, saying it could incapacitate the nation from necessary infrastructure development and growth.

The multilateral financial institution said the nation’s per capita income could plunge to 40 years low in 2020.

According to Mr. Shubham Chaudhuri, Country Director for World Bank in Nigeria, the decline in global oil prices had impacted government finances, remittances from the diaspora and the balance of payments.

Chaudhuri, who spoke during the 26th Nigerian Economic Summit organised by the Nigerian Economic Summit Group and the Federal Government, said while the nation’s debt is between 20 to 30 percent, rising debt service remains the bane of its numerous financial issues and growth.

Nigeria’s problem is that the debt service takes a big part of the government revenue,” he said.

He said, “Crisis like this is often what it takes to bring a nation together to have that consensus within the political, business, government, military, civil society to say, ‘We have to do something that departs from business as usual.’

“And for Nigeria, this is a critical juncture. With the contraction in GDP that could happen this year, Nigeria’s per capita income could be around what it was in 1980 – four decades ago.”

Nigeria’s per capita income stood at $847.40 in 1980, according to data from the World Bank. It rose to $3,222.69 in 2014 before falling to $2,229.9 in 2019.

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