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Crude Oil Gains as Saudi Lowers Export for September

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  • Crude Oil Gains as Saudi Lowers Export for September

Oil prices surged the most in a month after Saudi Arabia said it would lower crude production and exports in September.

Saudi Arabia, one of the world’s top exporters of crude oil, plans to export below 7 million barrels a day in September.

Oil prices had plunged to a seven-month low last week amid the US-China trade war and other global happenings like the Brexit, Libya civil unrest and the Venezuela sanctions by the USA.

The uncertainty weighed on commodity outlook as investors in the energy sector cut down on new investment due to the inability of the US and China to reach an agreement on trade after almost 3 years of back and forth discussions.

Saudi Arabia had pegged its 2019 oil benchmark at $70 a barrel but with crude oil trading about 32 percent lower than its project, the Kingdom needs higher prices to fund its 2019 budget or result to borrowing.

Therefore, the Kingdom was forced to cut back on production and exports in order to curtail further fall in prices and support the overall commodity market amid rising global risk.

The US WTI jumped 3.7 percent to $54.50 a barrel during the New York trading hours on Friday to pare its weekly loss to 2.7 percent. While Brent crude, against which Nigerian oil is priced, gained $1.15 to $58.53 barrel.

Despite the surged in oil prices the International Energy Agency lowered its 2019 and 2020 oil-demand projection, saying demand outlook ‘fragile’.

“Demand concerns are overshadowing everything else,” said John Kilduff, partner at Again Capital LLC. “The trade war is only worsening; it’s escalated significantly over the past few weeks.”

Saudi Arabia decision to produce and export below market demands in September boosted market outlook temporarily.

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 long experience in the global financial market.

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Economy

FG to Restrict Citizens of Certain Countries from Entering Nigeria

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FG Plans to Ban Citizens of Certain Nations from Entering Nigeria

The Federal Government on Monday announced that it would ban citizens of certain countries with high rates of COVID-19 from entering the country to better protect the nation from the ravaging pandemic.

Hadi Sirika, the Minister of Aviation, disclosed this in Abuja during the briefing of the Presidential Task Force on COVID-19.

According to him, this was why the federal government had not reopened commercial international flights into and out of the country.

He said, “On the question about when we are beginning international travels, certainly you are very aware that so many countries had placed ban on countries that we cannot go even from Nigeria.

“Also Nigeria, of course, will place ban on other countries that cannot come in here, because everyone is trying to keep safe.”

He added, “These and many other reasons will make us to be cautious, to study some more and to liaise with all the stakeholders and decide when we will open for international flights.”

The minister said while airline operators are pushing for full operation both locally and internationally, safety remains government priority when making such decisions.

Sirika said, “In aviation, we want to open like yesterday because we are losing money; we are bleeding. But we must stay alive first before we are able to make money.”

He added domestic flight operations at the nation’s airports were being staggered to avoid crowding and better enforce safety rules.

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Economy

Energy Firms Owe Banks N5.59 Trillion -CBN

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Energy Companies Owe Nigerian Banks  N5.59 Trillion -CBN

The Central Bank of Nigeria has said energy firms owed banks N5.59 trillion as of May 2020.

The amount, according to the sectoral analysis of banks’ credit, represents 30 percent of the N18.63 trillion loans advanced to the private sector during the period under review.

A break down of the report shows that oil and gas firms increased their debt by N300 billion from N4.58 trillion in December 2019 to N4.88 trillion. While the power companies owed N705.93 billion, up from N671.45 billion filed in December 2019.

Accordingly, oil companies that are operating in the downstream, natural gas and crude oil refining subsectors owed combined N3.59 trillion as of May, up from N3.42 trillion in five months ago. While those in the upstream and services subsectors owed N1.29 trillion.

Power generation firms and independent power producers increased their total debt to N385.05bn in May from N373.22bn in December, while transmission and distribution firms owed banks N320.87bn as of May as they borrowed N22.64bn in the first five months of this year.

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Economy

NNPC Spends N101.65bn on Petrol Subsidy in Q1 2020

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FG Spends Petrol N101.65bn on Petrol Subsidy in the First Quarter

The Nigerian National Petroleum Corporation (NNPC) said it spent N101.65 billion on petrol subsidy in the first three months of the year.

In its latest Monthly Financial and Operations report released for the month of March, the corporation described the spending as under-recovery.

A break down of the report shows N43.31 billion was spent in January while N20.68 billion and N37.66 billion were spent in February and March respectively.

The amount was spent before the Federal Government halted subsidy in April when global oil prices plunged due to the COVID-19 pandemic.

Speaking on subsidy, the former President, Association of National Accountants of Nigeria, Dr Sam Nzekwe, said “There is no need for subsidy again because they are using it to make unnecessary demands and this is the corruption that we are talking about. They are also using it to finance corruption too.

“The money that they would have used for other sectors or even send to FAAC is being used for subsidy and we cannot actually quantify its impact on the masses; rather, it is used to enrich a very few.”

Nzekwe urged the PPPRA to ensure subsidy does not return and encouraged the government to liberalise the downstream oil sector in order to allow other marketers to participate in fuel importation.

He said, “The NNPC should not be the only one importing petrol. The downstream sector must not continue like this. Other players should be allowed to play in the space too. The sector should be fully liberalised.

“And it is because the NNPC is the only one importing and almost running everything that makes it simple for it to say whatever it wanted as expenses on subsidy or under-recovery. This should not continue.”

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