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Nigeria Records Low Growth in Air Passenger Traffic

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  • Nigeria Records Low Growth in Air Passenger Traffic

Total passenger movement figures in 2016 and 2017 indicated that Nigeria recorded lower passenger traffic last year despite the fact that economic recession peaked in 2016 and started easing in 2017 as indices show that the economy witnessed a rebound with the reduction of exchange rate from N500 per dollar at the height of the recession to the current N360.

Passenger traffic movement records from the Federal Airports Authority of Nigeria (FAAN) showed that the total passenger movement in 2017 was 13, 704, 215, while the figures in 2016 was 14, 361, 587; indicating a reduction by about 4.6 per cent.

Domestic and international passenger traffic for major airports of Lagos, Abuja, Kano and Port Harcourt showed that there was consistent reduction in passenger movement in 2017 when compared to 2016.

Figures for the domestic passenger movement for the Murtala Muhammed International Airport (MMIA), Lagos in 2017 was 3, 684, 052, while that of 2016 was 3, 748,833, showing a reduction by 1.7 per cent.

International passenger movement for Lagos airport in 2017 was 2, 869,099, while that of 2016 was 2, 945, 914, showing 2.6 per cent reduction.

The Nnamdi Azikiwe International Airport, Abuja recorded in the same period domestic passenger moment of 2, 826, 113 in 2017 and 3, 344,164 in 2016 with reduction of 15. 5 per cent. Also, the international passenger traffic for the airport was 734, 509 in 2017 and 885, 926 in 2016 with reduction of 17.1 per cent.

The figures also showed that in 2017, the Mallam Aminu Kano International Airport, Kano recorded domestic passenger movement of 253, 578 and 255, 568 in 2016 with reduction of 0.8 per cent, while international passenger movement in 2017 was 186, 795 and 202, 589 in 2016 with reduction of 7.8 per cent.

Port Harcourt International Airport, Omagwa recorded domestic passenger movement of 865,659 in 2017 and 974, 028 in 2016 with reduction of 11.1 per cent; while international passenger traffic was 81, 125 in 2017 and 91, 499 in 2016 with reduction of 11.3 per cent.

Beyond comparison between 2017 and 2016, industry experts have observed that passenger growth figures in the last five years hovers between 13 to 16 million, thus defying projections that in 2030 passenger traffic would hit 31 million annually while that of Africa would hit 400 million.

The experts noted that so far Nigeria is not recording substantial increase in air passenger movement and despite the fact that the nation’s economy is growing, there seemed to be no growth in capacity in air transport sector.

The figures also indicate that in the next 12 years, Nigeria will increase its passenger traffic by about 18 million in order to meet the 31 million projections by 2030.

Travel expert and organiser of Akwaaba African Travel Market, Ikechi Uko reacting to the passenger growth figures, said that passenger movement is determined by the capacity of the economy, available airport infrastructure, seat supplies by airlines, noting that there have not been new airlines coming into the country, which means that the number of aircraft seats have remained about the same.

“If the economy improves more people will like to travel by air and if there are more aircraft, airlines will bring the fares down to fill the aircraft so with cheaper fares more people will travel. You recall when Aero was offering cheaper, promo fares; more people were travelling by air. So there was more passenger traffic but the current air fares have remained about the same since the last three years,” Uko noted.

He also observed that land transport is growing to become alternative to air transport because of improvement on roads, good service offerings by road transporters, adding that modernised airport facilities and efficient service would attract more people to travel by air.

“If you deploy more aircraft as an airline, you will do everything possible to fill the aircraft. You can bring down the fares to ensure that the aircraft is filled and when the fares are down, more people can afford to travel by air,” the travel expert also said.

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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