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Marketers Behind Move to Increase Fuel Price – PENGASSAN

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  • Marketers Behind Move to Increase Fuel Price – PENGASSAN

The scarcity of Premium Motor Spirit, popularly known as petrol, is mainly because of its hoarding and diversion by oil marketers who are pushing for an increase in the price of the commodity, the Petroleum and Natural Gas Senior Staff Association of Nigeria has said.

It specifically stated that dealers under the aegis of the Major Oil Marketers Association of Nigeria, Depot and Petroleum Products Marketers Association, as well as the Independent Petroleum Marketers Association of Nigeria were all involved in the hoarding and diversion of the product, a development that further worsened the scarcity of the product across the country on Friday.

In an exclusive interview with one of our correspondents in Abuja, the National President, PENGASSAN, Francis Johnson, stated that it was wrong to attribute the scarcity being witnessed in most parts of the country to the recent threat by the association to embark on a strike.

He argued that petrol scarcity was mainly because of the push by oil marketers for an increase in the pump price of the commodity, but stressed that the association would not support such a move.

He said, “And let me say it here that the oil marketers are complaining, they’ve been looking for ways to increase fuel price. But the labour unions, Trade Union Congress, Nigeria Labour Congress, Nigeria Union of Petroleum and Natural Gas Workers and PENGASSAN are the ones who still fight and say to the marketers that they can’t do that. All of the marketers, IPMAN, DAPPMA, MOMAN, etc, have been agitating for petrol price increase.

“They give you so many reasons, they say dollar is not accessible, they say this, they say that, but we tell them ‘no’, you can’t do that. And so subtle hoarding begins to take place, they start looking for ways to force the government to increase price. That is the game.”

Stressing that PENGASSAN had nothing to do with the fuel scarcity, Johnson said, “Like I told you earlier, left to the marketers, PMS will be selling at N500 per litre because they are there to make profits.

“They say they don’t have access to crude oil, they lack access to dollars and that it is only the NNPC that is importing. We said go and import, but they said if they must do that, fuel should be increased to N170 per litre.”

Meanwhile, the Nigerian National Petroleum Corporation also confirmed that there had been an alarming rate of products’ hoarding and diversion in the past three weeks, but refused to state the group of marketers involved in the act.

But in a swift reaction to the allegations against marketers, MOMAN stated that it would be tough to hoard products at the moment because the supply of PMS by the NNPC was grossly inadequate. DAPPMA also denied the allegations.

This is coming as thousands of commuters were on Friday stranded at various locations in Abuja, Lagos, Ibadan, Kaduna and other cities across the country due to the unavailability of petrol.

When contacted on the matter, the Executive Secretary, MOMAN, Obafemi Olawore, refuted the claims of products’ diversion and hoarding by marketers, adding that it was not true that marketers were pushing for an increase in the pump price of PMS.

He argued that there was a serious supply gap, as the NNPC was not importing enough products to go round the country.

Olawore said, “Nobody is hoarding. The truth is that you cannot hoard what you don’t have. There is shortage in supply and NNPC knows that. So, who is increasing the price? Nobody is talking of price increase. The truth is that the quantity of the product is not enough for the country.”

When told that the NNPC also complained about hoarding and that the corporation said it had started supplying about 80 million litres of PMS daily in order to halt the scarcity, Olawore replied, “Tell them (NNPC management) it is not true; tell them that that figure is not correct. They don’t have that figure. They should tell us where the product is.

“They don’t have it. They should stop telling the public what is not true. The product is not available. The product is in short supply. They are the only ones importing. We are not importing.”

Similarly, the Executive Secretary of DAPPMA, Olufemi Adewole, denied the allegations, saying, “I disagree with that because that is not true.”

He, however, noted that government owed its members over N800bn, which he said was affecting their business.

When asked if his organisation was against any increase in fuel price, he said, “Government is the sole importer because we cannot import and we cannot import because the landing cost is higher than the selling price. The government is telling us to bring in a product that its landing cost is about N160/N170 and sell at N145, and we can’t do it, so we are buying from the government because it can do that.

“That is different from asking the government to deregulate the sector and let the forces of demand and supply take effect. That is what we are after that; it will determine the price. That means that there are times that the price will rise and there are times that it will drop. It doesn’t mean that the price will rise and stay there.

“Between eight and 12 weeks ago, we were selling below the recommended price in our depots because of competition amongst us. So I disagree with the allegation that we are the cause of problem.

“Aside from that, marketers are being owed over N800bn and this money belongs to the banks, so they have stopped giving us loans until we pay back what we took. The Federal Executive Council approved the payment in June, passed it to the National Assembly but till today, the National Assembly has not approved it.

“And because we have not been able to pay back the loans we took from the banks, they have stopped giving us loans to do business. If we get our money back, the banks will give us loans and we will continue to trade. But the government is holding on to our money and wants us to keep borrowing from the banks, but the banks are saying ‘no, we have given you the maximum we can give you.’”

But when contacted on the matter, the Group General Manager, Group Public Affairs Division, NNPC, Ndu Ughamadu, insisted that petroleum products were being hoarded.

He said, “There have been many cases of hoarding, but I wouldn’t know whether the intention is to jerk up the prices of products. However, there have been many cases of hoarding, just like the one we discovered in Kano where 140 trucks were diverted.

“Some of your colleagues also called from Lagos asking me to confirm the hoarding and diversion of about 100 trucks of petrol, but I told them I could not confirm that because we didn’t own the tank farm in question. Again, there is this filling station where we supplied eight trucks and within four hours, they shut down the place and said they had run out of stock. Now, how is that possible?

“So we have detected many cases of hoarding. If you look at consumption, it shot up from 30 million litres to 80 million litres within a space of three weeks.”

Efforts to reach the National President of IPMAN, Chinedu Okoronkwo, on the phone were not successful as he neither answered his calls nor replied a text message sent to him.

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 Slip as Japan’s Rising Inflation Signals Rate Hikes

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Crude oil fell in early trading on Friday as concerns over sustained high interest rates in both Asia and the United States weighed on the outlook.

This trend is attributed to Japan’s increasing inflation, which is prompting expectations of imminent rate hikes by its central bank.

Brent crude edged declined by 11 cents to settle at $85.60 per barrel while the U.S. crude oil declined by 9 cents to $81.20 per barrel.

Recent data revealed that Japan’s core consumer prices rose by 2.5% in May compared to the same month last year. This increase marks a growth from the previous month, suggesting that the Bank of Japan is likely to raise interest rates in the upcoming months to curb inflation.

In the United States, data released on Thursday showed a decrease in the number of new unemployment claims for the week ending June 14, indicating continued strength in the job market.

This persistent robustness in employment raises the likelihood that the U.S. Federal Reserve will maintain higher interest rates for a longer period.

Higher interest rates typically have a dampening effect on economic activity, which can subsequently reduce oil demand.

The prospect of prolonged elevated interest rates in two major economies has therefore put downward pressure on crude oil prices.

Despite the downward trend, oil prices received some support from the latest figures from the Energy Information Administration (EIA).

The data showed a drawdown in U.S. crude inventories by 2.5 million barrels in the week ending June 14, bringing the total to 457.1 million barrels. This exceeded analysts’ expectations, who had predicted a 2.2 million-barrel reduction.

Also, gasoline inventories fell by 2.3 million barrels to 231.2 million barrels, contrary to forecasts that anticipated a 600,000-barrel increase.

“Gasoline finally came to life and posted its first strong report of the summer driving season,” remarked Bob Yawger, director of energy futures at Mizuho in New York, highlighting the surprising uptick in gasoline demand.

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Nembe Creek Oil Field Halted After Leak, Impacting 150,000 bpd

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Nigeria’s oil output has taken a significant hit following the shutdown of the Nembe Creek oil field due to a major oil leak.

The Nembe Creek oil field, responsible for producing approximately 150,000 barrels of crude oil per day (bpd), was forced to cease operations on June 17, 2024.

The leak occurred on the Nembe Creek Trunk Line (NCTL), a critical pipeline that transports oil from the Nembe Creek oil field to the Bonny Oil Export Terminal.

The operator of the pipeline, Aiteo Eastern Exploration and Production Company, confirmed the leak and the subsequent shutdown in a statement released yesterday.

Aiteo reported that the leak was discovered during routine operations in the Nembe area of Bayelsa State, located in Nigeria’s oil-rich Delta region.

This region is notorious for environmental degradation due to decades of oil spills, which have severely impacted local agriculture and fishing industries.

Following the discovery of the leak, Aiteo activated its Oil Spill and Emergency Response Team and shut down all production from Oil Mining Lease (OML) 29 as a precautionary measure to prevent further environmental damage.

“While we regret the production losses and the potential environmental impact, our current priority is to expedite an efficient spill management process in line with regulatory standards and collaborate with all stakeholders to restore production and mitigate associated risks,” said Victor Okronkwo, Managing Director of Aiteo Eastern E&P.

The exact cause of the leak remains unknown. Aiteo emphasized that the shutdown was a precautionary step to contain the spill and minimize environmental harm.

The company has notified its joint venture partners and relevant regulatory bodies, including the Nigerian Upstream Petroleum Regulatory Commission (NUPRC) and the National Oil Spill Detection and Response Agency (NOSDRA), about the incident.

This development comes as a setback for Nigeria, which holds Africa’s largest natural gas reserves and is a major oil producer.

The country’s oil sector has faced numerous challenges, including aging infrastructure, theft, and environmental issues, which have hindered its ability to maximize production and exports.

The Nembe Creek shutdown also highlights ongoing concerns about the safety and reliability of Nigeria’s oil infrastructure. The NCTL has been a frequent target of oil theft and sabotage, exacerbating the challenges of maintaining a steady oil output.

Energy analysts believe that the latest incident could impact Nigeria’s ability to meet its export commitments and exacerbate the country’s economic challenges.

The Nigerian government, under President Bola Tinubu, has been making efforts to attract investment into the energy sector to boost production and address infrastructure deficits.

“The government will hope this offers confidence not only in the quality of the Nigerian resource base, but also in the government’s pledge to improve ease of doing business,” said Clementine Wallop, director of sub-Saharan Africa at political risk consultancy Horizon Engage.

As Nigeria works to address the immediate spill and restore production, the broader implications for the country’s oil sector and its environmental impact remain to be seen.

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Brent Crude Nears Seven-Week Highs as Market Eyes US Inventory Report

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Brent oil, the international benchmark for Nigerian crude oil, remained steady on Thursday, hovering just below seven-week highs as the escalating conflict in the Middle East raised concerns over potential supply disruptions.

At the same time, the market eagerly awaits U.S. inventory data for further indications of demand trends.

August Brent crude rose 28 cents, or 0.3%, to $85.35 a barrel while the U.S West Texas Intermediate (WTI) oil gained 13 cents, or 0.2%, to $81.70 a barrel.

“There was no WTI settlement on Wednesday due to a U.S. public holiday, which kept trading subdued,” noted Ricardo Evangelista, an analyst at ActivTrades.

“However, oil prices are likely to remain supported around current levels due to a growing geopolitical risk premium driven by conflict in the Middle East.”

Israeli forces have intensified their operations in the Gaza Strip, targeting areas in the central region overnight while tanks advanced into Rafah in the south.

The escalating violence has heightened fears of a broader conflict that could impact oil supplies from the region.

“Expectations of an inventory build appear to be overshadowing fears of escalating geopolitical stress for now,” said Priyanka Sachdeva, senior market analyst at Phillip Nova.

Investors are keenly awaiting the release of U.S. inventory data from the Energy Information Administration (EIA) later on Thursday, delayed by a day due to the Juneteenth holiday.

An industry report released on Tuesday by the American Petroleum Institute (API) indicated that U.S. crude stocks rose by 2.264 million barrels in the week ending June 14, while gasoline inventories fell, according to market sources.

The summer season typically sees an uptick in oil demand due to increased refinery runs and weather-related risks.

“Ongoing production cuts by the OPEC+ group, combined with seasonal demand, should tighten oil balances and lead to inventory draws during the summer months,” J.P. Morgan commodities analysts wrote.

Refining margins have also improved, with the ICE gasoil futures premium to Brent crude jumping to $20.63 a barrel on Wednesday, a two-month high.

“Firmer fuel refining margins provide a healthy dose of encouragement for those expecting improvements on the demand side,” commented Tamas Varga, an analyst at PVM.

In other economic news, the Bank of England’s decision to keep its main interest rate unchanged at a 16-year high of 5.25% ahead of the national election on July 4 has been noted by market observers.

Higher interest rates generally increase the cost of borrowing, which can slow economic activity and dampen oil demand.

As the market braces for the upcoming EIA inventory report, analysts and traders are closely watching for any signals that could influence oil prices in the near term.

The delicate balance between geopolitical tensions and supply-demand fundamentals continues to play a critical role in shaping the oil market landscape.

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