Economy
Crude Recovers After Saudi Output Heads to Pre-COVID Levels
By Adedapo Adesanya
Crude prices returned to the bullish region after sinking on a volatile trading Thursday due to a reversal as a result of information that Saudi Arabia’s oil output will soon surpass 10 million barrels per day for the first time since the outset of the COVID-19 pandemic.
Consequently, the Brent crude rose by 75 cents or 0.93 per cent to settle at $81.29 after initially falling to $80.54 a barrel, while the United States West Texas Intermediate (WTI) crude returned to $79.72 after first depreciating to $78.81 a barrel.
Saudi-owned Al Arabiya TV reported that the world’s largest oil exporter would see its export hit the pre-COVID levels after the nation, along with other Organisation of the Petroleum Exporting Countries and its allies (OPEC+) agreed to stick to previously agreed-upon production increases.
Saudi Arabia and Russia, the OPEC and non-OPEC groups leaders within OPEC+, respectively, will each have a production ceiling of just over 10 million barrels per day—at 10.018 million barrels per day each.
OPEC+ will roll over its August programme to gradually increase oil production by 400,000 barrels per day each month ignoring pressure from big players like the US to help cool the market.
According to Russian Energy Minister Alexander Novak after the meeting, “The decision was made previously to increase production by 400,000 barrels per day every month, and I underscore every month, until the end of 2022. Today the decision was reiterated to maintain current parameters which were decided on earlier.”
He added that the market was not heeding the requests and complaints from other countries because they were maintaining market balance and remaining wary of potential changes in demand especially due to uncertain elements like COVID-19.
On his part, the Nigerian Minister of State for Petroleum Resources, Mr Timipre Sylva said “OPEC has made it clear that we are not looking at prices, we are looking at supply and demand. And the supply is not enough to react to what is happening in the market. Especially when you compare it to what is happening in the gas market. As a responsible organisation, it is time to just watch the market.”
Oil prices have recently hit their highest levels since 2014, and crude-importing countries have had to face the brunt.
Recently, US President, Mr Joe Biden, blamed the reluctance of the alliance to pump more oil for the sharp rise in energy prices in the US and around the world.
As per the production table provided by OPEC, the producers will have a collective quota of required production of 40.094 million barrels per day in December, of which the 10 OPEC members bound by the pact should pump no more than 24.3 million barrels per day, and the non-OPEC producers led by Russia will have a ceiling of 15.794 million barrels per day.
By Dipo Olowookere
Subscription for the July 2026 edition of the FGN savings bond is closing today, Friday, July 10.
The exercise started on Monday, July 6, with two tenures of two years and three years on offer to retail investors.
The retail bonds are sold by the federal government through the Debt Management Office (DMO) to raise funds for the country’s budget deficits.
The savings bond offers investors steady tax-free income. It is risk-free, backed by the Nigerian government, and listed on the Nigerian Exchange (NGX) Limited, allowing for secondary market trading and easy exit before maturity.
For the two-year FGN savings bond maturing on July 15, 2028, the debt office is offering it at a 14.716 per cent per annum interest rate, while the three-year FGN savings bond due July 15, 2029, is at 15.716 per cent per annum, with the interest on the investment being paid by the government every quarter.
Intending investors can purchase the debt instrument at a unit price of N1,000, subject to a minimum subscription of N5,000 and in multiples of N1,000 thereafter, subject to a maximum subscription of N50.0 million.
By Dipo Olowookere
The upward trend on the Nigerian Exchange (NGX) Limited continued on Thursday despite profit-taking in energy stocks by investors.
The local exchange further appreciated by 0.62 per cent yesterday, as market participants mopped up equities in the other key sectors, especially in the financial services.
The banking space rose by 1.33 per cent, the consumer goods counter expanded by 1.21 per cent, and the insurance index grew by 0.26 per cent, while the industrial goods segment closed flat, with the energy sector down by 0.19 per cent.
At the close of business, the All-Share Index (ASI) gained 1,498.75 points to finish at 243,958.73 points compared with the previous day’s 242,459.98 points, and the market capitalisation advanced by N962 billion to N156.548 trillion from N155.586 trillion.
The market breadth index remained positive, though the bears are giving the bulls a close marking. Customs Street ended the session with 28 price gainers and 26 price losers, representing strong investor sentiment.
International Breweries improved by 10.00 per cent to N12.10, First Holdco appreciated by 9.96 per cent to N69.55, Abbey Bank grew by 9.88 per cent to N8.90, Trans-Nationwide Express rose by 9.76 per cent to N3.26, and Honeywell Flour increased by 9.68 per cent to N17.00.
Conversely, Thomas Wyatt declined by 10.00 per cent to N2.70, Geregu Power shrank by 10.00 per cent to N825.70, McNichols moderated by 9.76 per cent to N5.55, UPDC slipped by 9.20 per cent to N3.95, and Neimeth contracted by 8.16 per cent to N9.00.
A total of 1.7 billion stocks valued at N112.0 billion were traded in 44,780 deals yesterday, in contrast to the 518.4 million stocks worth N22.8 billion traded in 48,495 deals on Wednesday, indicating a slip in the number of deals by 7.66 per cent, and a surge in the trading volume and value by 227.93 per cent and 391.23 per cent, respectively.
First Holdco was the busiest equity for the day, with a turnover of 1.3 billion units worth N85.6 billion. Zenith Bank exchanged 43.8 million units for N4.7 billion, Access Holdings transacted 41.0 million units valued at N1.0 billion, FCMB traded 17.7 million units worth N188.3 million, and Fidelity Bank sold 16.0 million units valued at N315.2 million.
By Adedapo Adesanya
Crude oil slid about 2 per cent on Thursday amid worries that rising inflation and other economic concerns could weigh on global oil demand despite fresh Middle East tensions.
Brent futures fell by $1.72 or 2.2 per cent to settle at $76.30 a barrel, while the US West Texas Intermediate (WTI) crude went down by $1.44 or 2.0 per cent to $72.08 per barrel.
Iranian armed forces launched attacks on US military infrastructure in Gulf states on Thursday following America’s strikes on its southern coastal and eastern provinces, further straining a three-week-old ceasefire agreement.
This adds to continued supply constraints as the US-Iran conflict has delayed the full reopening of the Strait of Hormuz, where about 20 per cent of global oil supplies passed through the strait before the war.
On Thursday, only one tanker reportedly moved along the waterway, and it was a sanctioned Very Large Crude Carrier (VLCC) that passed along the Iran-controlled route along with an Iranian container ship.
According to Bloomberg, around 14 commodity-carrying vessels had traversed the Strait of Hormuz on Wednesday. In the past three weeks, following the ceasefire deal, the strait saw an average of 34 tanker crossings per day, peaking at 59 on June 24, data from Kpler showed.
Axios reported that the US Administration believes it has more room for escalation as millions of barrels of oil have managed to exit the Strait of Hormuz in recent weeks, easing concerns about oil price spikes.
Qatar, which has often mediated between the US and its adversaries, including Iran, condemned attacks on commercial shipping and called for a return to diplomacy. The foreign ministers of Turkey and Oman also stressed the need to avoid further military escalation in calls with their Iranian counterpart, Mr Abbas Araqchi.
Minutes of the US Federal Reserve’s June 16 to 17 meeting showed policymakers’ concerns about inflation mounted last month. When the US central bank boosts interest rates to keep inflation in check, it can reduce economic growth and cut oil demand.
In China, the world’s second-biggest economy behind the US, producer price inflation surged in June to its highest level in four years, piling pressure on manufacturers’ profit margins as weak domestic demand limited pricing power.
