Economy
Fresh Hopes of US Stimulus, Weaker Dollar Favour Crude Oil
By Adedapo Adesanya
Oil prices closed higher on Tuesday as the market hopped on a weaker Dollar and hopes of a better economic stimulus in the United States.
During the session, the Brent gained 30 cents or 0.54 per cent to sell at $56.20 per barrel, while the West Texas Intermediate (WTI) crude made a 0.45 per cent or 24 cents growth to trade at $53.22 per barrel.
The US Dollar slipped from close to its highest in nearly a month, dropping 0.3 per cent and this strengthened the position of other currency holders as a weaker greenback increased their stance on the commodity.
The market also received a boost as the United States Treasury secretary, Janet Yellen, used her confirmation hearing to bolster the case for additional fiscal stimulus.
The move, if successful, would help to mend the economic damage inflicted by the coronavirus pandemic on the world’s largest economy.
President-elect Joe Biden had last week rolled out a $1.9 trillion coronavirus relief plan that includes cash payments to Americans and money for distributing COVID-19 vaccines.
Analysts noted that strong (stimulus) package would psychologically lift the mood of the investor and a good many consumers are going to go out and spend.
These factors outweighed other stronger ones especially in terms of demand as the International Energy Agency (IEA) cut its forecast for 2021 crude demand.
The IEA on Tuesday cut its forecast for demand in 2021 by 280,000 barrels a day to 5.5 million barrels a day. The bleaker outlook focused mainly on the start of the year, with a 600,000 barrels per day cut to its forecasts for the first quarter and a 300,000 barrels per day cut to its forecasts for the second quarter.
The drop in the first quarter demand is due to a combination of surging case counts across the US and Europe, as well as calls within China to limit travel for the Lunar New Year, a period that sees more people travel than any other single event in the most populous counter in the world.
The Paris-based group, which advises the world’s largest economies on energy-related matters, expects higher demand to allow world oil supply rise by 1.2 million barrels per day this year, following a record decline of 6.6 million barrels per day in 2020.
The IEA expects global oil stocks to fall by 1.1 million barrels per day in the first quarter of 2021, assuming the Organisation of the Petroleum Exporting Countries and its allies, OPEC+, is fully compliant with the latest agreement of increasing production by only 500,000 barrels a day.
Despite the mood on Tuesday, there are also fears among investors due to President-elect Joe Biden’s inauguration on Wednesday, fearing more far-right mob violence.
Weekly data on US petroleum supplies from the Energy Information Administration (EIA) will be released on Thursday, a day later than usual because of Monday’s Martin Luther King, Jr. holiday in America.
By Adedapo Adesanya
The United States has lamented Nigeria’s import ban on 25 different products, particularly in agriculture, pharmaceuticals, beverages, and consumer goods, as it rationalised the recent decision to slap a 14 per cent retaliatory tariff.
The United States Trade Representative, in a statement on Monday posted on its X platform, said Nigeria’s restrictions on items like beef, pork, poultry, fruit juices, medicaments, and spirits limit US market access and reduce export opportunities.
“These policies create significant trade barriers that lead to lost revenue for US businesses looking to expand in the Nigerian market,” it wrote.
Last week, the administration of President Donald Trump imposed various tariffs ranging between 10 per cent and 65 per cent on different countries across the world, including Nigeria which got a 14 per cent tariff on its exports to the US.
In response, the Nigerian Minister of Trade, Industry, and Investment, Mrs Jumoke Oduwole, said Nigeria would take a pragmatic approach and will boost non-oil exports to deal with the drawbacks from the US move.
She also said Nigeria will be willing to negotiate and will be speaking with the World Trade Organisation (WTO) on the way forward.
On his part, the Minister of Finance, Mr Wale Edun, said that the Economic Management Team (EMT) would meet to assess the likely impact of the 14 per cent tariff on goods exported from Nigeria to the US.
He said the EMT will afterwards, make recommendations to cushion its impact on the nation’s economy.
The Minister also said the federal government will boost non-revenue as a means of cushioning the adverse effects to trade tariffs imposed on countries by President Trump.
Mr Edun also assured that while the adverse effect on Nigeria will be through an oil price plunge, the government is intensifying efforts to ramp up oil production and boost non-oil revenues.
By Adedapo Adesanya
Nigeria and Japan have launched a strategic venture capital initiative that will channel Naira-denominated investments into high-growth startups, shielding them from currency risks while unlocking access to long-term concessional financing.
The Minister of Finance and Coordinating Minister of the Economy, Mr Wale Edun, met with officials from the Nigeria Sovereign Investment Authority (NSIA) and the Japan International Cooperation Agency (JICA) to finalise the framework of the fund, which has now received formal approval from the Japanese government.
Speaking on the development, Mr Edun welcomed the development, calling it a timely response to Nigeria’s youthful demography.
He said this fund provides critical financial backing across the capital structure—from equity to debt—and is aligned with President Bola Tinubu’s Renewed Hope Agenda for inclusive economic growth, he stated.
On his part, NSIA CEO, Mr Aminu Umar-Sadiq confirmed that the initiative satisfies two key conditions set by the Minister: mitigating foreign exchange volatility by investing in Naira and securing first-loss or grant capital to de-risk private investment.
“With JICA’s support, this is not just a proposed solution—it’s a fully approved, ready-to-launch initiative,” Mr Umar-Sadiq said.
By combining international concessional financing with domestic currency stability, the fund marks a new model for venture capital in Africa, aimed squarely at empowering the next generation of Nigerian innovators.
By Adedapo Adesanya
The Minister of Finance, Mr Wale Edun, has said the country’s Economic Management Team (EMT) would meet to assess the likely impact of the 14 per cent tariff on goods exported from Nigeria to the United States.
Mr Edun made the disclosure while speaking at an event organised by the Ministry of Finance Incorporated (MOFI) on Monday.
The Trump administration recently imposed various tariffs ranging between 10 per cent and 65 per cent on different countries across the world, including Nigeria which got a 14 per cent tariff on its exports to the United States.
He said the EMT will afterwards make recommendations to cushion its impact on the nation’s economy, noting that the federal government will boost non-revenue as a means of cushioning the adverse effects to trade tariffs imposed on countries by President Trump.
Mr Edun stated that while the adverse effect on Nigeria will result in an oil price plunge, the government is intensifying efforts to ramp up oil production and boost non-oil revenues.
The Finance Minister noted that the US, which is at the centre of the tariff war had on April 2, announced that it would exempt mineral exports, including oil.
“Therefore, it’s the price effect, the oil price effect that may affect Nigeria. And it is the job and responsibility of the economic management team of President Bola Ahmed Tinubu, amongst others, to look at the various scenarios that might play out.
“There’s global uncertainty at a huge level, so nobody knows exactly what will happen- the announcement that has been made. We’re not sure what will be delayed, what will be reversed, or what will be implemented.
“So, it is not an announcement that the budget is being reviewed. It’s an announcement that it is our responsibility to look at the various scenarios and options and advise government accordingly.”
Mr Edun also highlighted plans to look at budget adjustment, expenditure prioritisation as well as innovative non-debt financing strategies.
According to him, Nigeria had recorded a trade surplus in the last three years (2022-2024) with the US.
“Nigeria-US Trade has been in surplus in the last 3 years (2022-2024). Nigeria’s exports to the US were N1.8 trillion, N2.6 trillion and N5.5 trillion in 2022-2024, respectively.
“Fortunately, oil and mineral exports accounted for 92 per cent. Implying oil and minerals exports amounted to N5.08 trillion in value while non-oil was just N0.44 trillion.
“Consequently, the tariff effect on exports is negligible if we sustain our oil and minerals export volume.
“The adverse effect on Nigeria will be through oil price plunge. We are intensifying efforts to ramp up crude oil production to curtail any price effect
“We are also focusing on non-oil revenue mobilisation by FIRS and Customs, budget adjustment and prioritisation where possible, and also and innovative non-debt financing strategies,” the Minister said.
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