OIL MARKETS

OIL MARKETS

This blog is an indepth  and frequently critical analysis of topical issues in the global oil markets  as they relate to Nigeria

 

 An analysis on global oil market and how they effect Nigeria's economic and financial well being. Nigeria's economy is inextricably linked to these markets and the decisions key actors take to safeguard  and promote their own economic objectives. Nigeria principally seeks to excersize its own influence on the global stage through its membership of OPEC. But just how effective is OPEC? Do the key actors share similar policy objectives or political alignments with Nigeria. Has OPEC+ (inclusion of Russia) altered the organisations focus?

The blog also analyses the broader issues in respect of fossil fuels, geopolitical events and their ramifications for Nigeria. We critique the Nigerian government policy decision making and other legislation and the effect it has on Nigeria's prosperity

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"If I have to do tariffs on oil coming from outside or if I have to do something to protect our ... tens of thousands of energy workers and our great companies that produce all these jobs, I'll do whatever I have to do," ... . Unless US Shale is about to perform a volte-face, there is no possibility of an agreement to rebalance the global oil markets. Trump seems to have sparked a market rebound on friday with his now familiar Trump tweets which lent the market a "sugar high" with a dubious narrative only the rash or the desperate translate into price action. Typically his tweet sought to reprise his previous non existent role of the redeemer. Apparently he had spoken to the two protagonists in the Russia- Saudi oil price war and based upon that conversation and his power of persuasion, they had both agreed to cut production by 10-15 million barrels a day. In any event his tweet seemed to provide a trigger to the market with a record surge in both Brent and WTI prices. WTI is currently trading at $28.34 up from $20.31 on wednesdays trading and Brent surging to $34.11 up from $24.81…
Friday, 03 April 2020 23:56

NIGERIAN OIL SHUT-IN LIKE END OF DAYS

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NIGERIA BRACES AS CRUDE OIL SHUT-INS LOOM Brent crude the international oil price benchmark and the basis which Nigeria uses for price discovery of its crude grades fell to $22 per barrel on Monday, its lowest level in 18 years . Such a price if it persists for a short while will mean that Nigeria will have no option other than to shut in production. Given that in order to find buyers, crude will have to be offered at a discount to this benchmark, the business becomes unprofitable. The Nigerian National Petroleum Corporation (NNPC) was reported on Monday to have cut its April official selling prices for Bonny Light and Qua Iboe, two of the its major grades, by $5 per barrel to dated Brent minus $3.29 and minus $3.10 per barrel, respectively. The price reflects the desperation to cajoule Traders in a stringent buyers market and also represents a first in NNPC OSP pricing history. Most producers are offloading their oil for below $20 per barrel as the double whammy of coronavirus pandemic demand destruction and global oversupply amid an action by Saudi Arabia and Russian. Last week, Russia got as little as $18 per barrel for its benchmark…
Tuesday, 31 March 2020 23:36

EXCESS CRUDE ACCOUNT A BRAZEN SLUSH FUND

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It simply cannot be the case that an Excess Crude Account which has swallowed a whooping $107.4 billion since it was established should be beyond the scrutiny of the Nigeria people. If the so called Excess Crude Account (ECA) could talk I suspect it would have a harrowing tale to tell. It would reveal hitherto unknown details of transactions hidden from public scrutiny. It would be telling the story from its sick bed after years of abuse, mistreatment and deceit. It would also be telling us that it should not have existed after 2011, when the Nigerian Sovereign Investment Authority (NSIA) bill was passed. Nigerians should have known from the very begining that anything that has 'excess as' a part of its title would not end well. You don't need to be Freud to have foreseen its outcome. Now at a time of crisis, that rainy day we hoped would never come, like Old Mother Hubbard in the children's nursery ryhme, the cupboard is bare. The ECA was stablished in 2004 with the primary objective to protect Nigeria’s planned budgets against shortfalls caused by crude oil price volatility. The premise was sensible and it was anticipated that this prudent measure…
Tuesday, 31 March 2020 00:52

BUHARI TIME FOR CBN TO FLOAT THE NAIRA

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Nigeria must now prepare to accept the new reality, the time of windfall booms fuelled by surging oil revenues has come to an end. The world is awash with oil at a time the renewable footprint is ever increasing. More importantly what the global oil market is witnessing in a time of demand destruction is an existential struggle for market share. Nigeria is ill equipped to join this battle. In the 1980s the Nigerian economy first fell victim to a calamitous economic decline following a windfall boom brought on by crashing oil revenues. The same thing happened in 2014 and as a consequence drove the country into recession . It has now happened yet again in 2020. To make things worse it comes at a perilous time with COVID-19 threatening economic and societal Armageddon.