- Oil Prices Fall as Saudi, Russian Output Rises
Oil prices fell on Monday as supplies from Saudi Arabia and Russia rose while economic growth stumbled in Asia amid an escalating trade dispute with the U.S.
Benchmark Brent crude oil LCOc1 fell 1.24 dollars a barrel to a low of $77.99 before recovering to $78.40, down 83 cents, by 7.35 GMT. U.S. light crude CLc1 was 50 cents lower at 73.65 dollars.
Oil prices rose strongly in June, with the U.S. crude contract hitting its highest in years and a half years at 74.46 dollars .
But a flurry of U.S. announcements over the weekend unsettled oil markets.
U.S. President Donald Trump tweeted on Saturday that Saudi Arabia’s King Salman bin Abdulaziz Al Saud had agreed to pump more oil, “maybe up to 2,000,000 barrels”.
The White House later walked back on the comments.
Saudi Arabia’s output is up by 700,000 barrels per day (bpd) from May, a Reuters survey showed, and close to its 10.72 million bpd record from November 2016.
Russian output rose to 11.06 million bpd in June from 10.97 million bpd in May, the Energy Ministry said on Monday.
U.S. production C-OUT-T-EIA has soared 30 per cent in the past two years, to 10.9 million bpd, meaning the world’s three biggest oil producers now churn out almost 11 million bpd each, meeting a third of global oil demand.
Also weighing on oil demand are trade disputes between the United States and other major economies including China, the European Union, India and Canada.
Asia’s main economic hubs of China, Japan and South Korea reported a slowdown in export orders in June amid escalating trade disputes with the United States.
“Recurring salvos in the trade war and falling asset prices raise the question of how much tariffs could damage the global economy,” U.S. bank JPMorgan said.
The bank said a “medium-intensity (trade) conflict would likely reduce global economic growth by at least 0.5 per cent, “before accounting for tighter financial conditions and sentiment shocks”.
In spite of the relief from Saudi Arabia and Russia, oil markets remain tense because of unplanned outages from Canada to Venezuela and Libya.
Looming U.S. sanctions against Iran further contribute to expected tightness.
Trump threatened in an interview that aired on Sunday to put sanctions on European companies that do business with Iran.
“The Trump administration’s plan for Iran sanctions is now abundantly clear. They seek to push Iranian exports of crude, condensate, and oil products to zero,” energy consultancy FGE said in a note.
Oil Prices Decline on Rising COVID-19 Cases
Global Oil Prices Dipped on Friday as New COVID-19 Cases Jump Globally
Global oil prices decline on Friday as the number of confirmed COVID-19 cases surged across the world.
Brent crude oil, against which Nigerian oil is priced, declined from $43.47 per barrel it traded on Thursday during the Asian trading session to $41.60 per barrel on Friday at around 11:39 am Nigerian time.
Oil traders and investors are worried that the rising number of COVID-19 new cases would disrupt demand for the commodity and force refineries to shut down once again.
“I do not suspect many oil traders will be looking to place significant bids in the market today, suggesting prices may continue to wallow into the weekend,” said Stephen Innes, chief global markets strategist at AxiCorp.
Despite efforts by both OPEC plus and other top oil producers to halt falling oil prices and reduce global oil glut, the lack of a cure for COVID-19 remained global concerns.
As previously stated on this platform, until a cure is found the world would have to find a way to either work through COVID-19 or shut down activities completely.
This is coming a day after the Federal Government of Nigeria announced that it was putting school resumption plan on hold following the latest COVID-19 report that shows Nigeria’s confirmed cases crossed 30,000 on Wednesday.
In the United States, more than 60,000 new COVID-19 cases were reported on Thursday, forcing lawmakers to start contemplating the second phase of COVID-19 lockdown.
We Are Losing N13.9bn Monthly Because FG Caps Tariff – Discos
Discos Says it is Losing N14bn Monthly Because of NERC Capped Tariff
The Nigerian power Distribution Companies (Discos) have said they a losing N13.9 billion in revenue every month because the Nigerian Electricity Regulatory Commission, limited how much they can charge for consumption.
Ernest Mupwaya, the Managing Director, Abuja Electricity Distribution Company, made the statement during a presentation on behalf of the Discos to the House of Representatives Committee on Power.
The statement was after the Discos demanded realistic indices before the implementation of the proposed service reflective tariff, which was supposed to be implemented on July 1.
Mupwaya said there were some outstanding requirements before the service reflective tariff could be implemented.
“One of them is the removal of estimated billing caps. The financial impact of the Capping Order is an average loss of N13.9bn monthly, thereby, undermining or jeopardising the minimum remittance requirement,” Mupwaya stated.
The July 1 service tariff implementation was halted by members of the National Assembly, who prevailed on the Discos to shelve the date to the first quarter of 2021 due to the current economic challenges in Nigeria.
Gbajabiamila Says Nigeria Can’t Compete in AfCFTA With Weak Industries
Nigeria Must Ramp up Industrialisation to Prevent Dumping by Other Nations
The Speaker of the House of Representatives, Femi Gbajabiamila, has said the nation can not compete effectively in the African Continental Free Trade Area (AfCFTA) with weak industrialisation and manufacturing activities.
Gbajabiamila disclosed this while receiving Adesoji Adesugba, the newly appointed Managing Director of the Nigeria Export Processing Zones Authority.
The details of the visit were made public on Thursday in a statement titled, “AFCFTA: House Speaker tasks Nigeria on industrialisation through free trade zones.”
Gbajabiamila was quoted as saying “We must act proactively so that we don’t become a dumping ground for other African nations.
“Our best option in this circumstance is to immediately set machinery in motion to ensure the effective functioning and flourishing of our export processing zones.
“We must remove all bottlenecks and perfect all stumbling blocks. We will then be fully prepared for AfCFTA and also generate massive jobs for our unemployed youths and enhance our foreign earnings.”
He added that the nation must as a matter of national emergency ramp up industrialisation through free trade zones and other effective means to compete with South Africa, Africa’s most industrialised economy and other African nations.
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