Connect with us

Economy

Nigeria, Others Free to Ramp up Production as OPEC+ Deal Expires

Published

on

opec oil output

By Adedapo Adesanya

A deal signed by members of the Organisation of the Petroleum Exporting Countries (OPEC) and 10 allies led by Russia to reduce the volume of crude oil production has ended.

The agreement expired on Tuesday, March 31, 2020 and efforts to extend it for three months to support prices of the commodity during this COVID-19 period were futile.

The three years between all 14 members of the cartel and 10 other non-OPEC members to cut production since the 2016 oil bust saw a new production cut totalling 2.1 million expire when Russia and Saudi Arabia could not agree to deepen cuts.

Crude prices, which had reached up to $70 in January, started plunging late January as a novel coronavirus started spreading, starting from China, the world’s largest importer of the black gold to other countries.

When things were getting out of hand, the oil cartel quickly called for a necessary intervention, but after a three-day meeting from March 4-6 in Vienna, Austria, Russia walked out the gathering, where the issue was being discussed.

Thereafter, Russia’s energy minister, Mr Alexander Novak, declared that all members of the alliance, which includes Nigeria, can start pumping the crude into the market at will.

The weekend after this declaration, Saudi Arabia took the first strike as it initiated a price war that triggered a major fall in the price of oil, with prices falling more than 30 percent as a result of the Kingdom discounting its crude grade and announcing an increase in its production.

As a result of this action by Saudi Arabia, crude prices have lost close to 70 percent since January 3 and the situation has threatened the oil industry.

On the demand side, the coronavirus outbreak that originated in China has became a global health crisis, as there have been over 861,110 cases, leading to trouble for major economies, industries, and energy consumption.

Forecasts now call for global oil demand to decline between 15 million and 20 million barrels per day, with more downward revisions likely to be made in the coming weeks.

Business Post had reported on Monday that Goldman Sachs estimated that this week alone, global oil demand would collapse by 26 million bpd or 25 percent.

On the supply side, Saudi Arabia and Russia have have not heeded to pressure even from the Donald Trump administration. Both countries have increased production after failing to secure an OPEC+ production agreement.

Saudi Arabia on Tuesday reaffirmed plans to boost production to a maximum 12 million barrels per day beginning today.

On Nigeria’s part, the country, which is Africa’s largest producer of the product, will commence a 2.5 million barrels per day output also effective from today as disclosed by the Minister of State for Petroleum, Mr Timipre Sylva, last week.

Other producers will also produce in their capacity, further adding to a market glut that will only worsen and make the commodity cheaper at the market. This could make the total world production forecast of 102.1 million barrels per day for this year to double.

Adedapo Adesanya is a journalist, polymath, and connoisseur of everything art. When he is not writing, he has his nose buried in one of the many books or articles he has bookmarked or simply listening to good music with a bottle of beer or wine. He supports the greatest club in the world, Manchester United F.C.

Continue Reading
Click to comment

Leave a Reply

Economy

Introduction of Capital Gains Tax Could Discourage Investors—Popoola

Published

on

capital gains tax

By Aduragbemi Omiyale

As part of efforts to raise more funds for the provision of critical infrastructure in the country, the federal government recently introduced the capital gains tax.

This was embedded in the 2021 Finance Act and it required the payment of capital gains tax on transactions worth over N100 million.

The chief executive of the Nigerian Exchange (NGX) Limited, Mr Temi Popoola, applauded this initiative of the government but warned that it could discourage investors, especially the high net-worth individuals (HNIs) and institutional investors, who carried out such heavy deals.

Mr Popoola, who spoke a few months ago at the Nigerian Economic Summit Group (NESG) Fiscal Policy Roundtable, called for a balance.

He admitted that the capital gains tax is in line with the government’s drive towards an increased tax bracket but was only worried about the adverse effect the laudable policy could have on the economy in the long run.

However, Mr Popoola commended the economic policy direction of the administration of President Muhammadu Buhari, noting that it was an indication of the government’s commitment to driving non-oil revenues into the country.

The NGX chief said the tenets of the 2021 Finance Act brought a lot more clarity on investment such as the Real Estate Investment Trust (REIT), Capital Gain Tax (CGT) and securities lending transactions.

According to him, investing in real estate investment brings a lot of potential gains and “if you look at our market today, all our assets class has helped to boost investors’ confidence.”

He stated that the Finance Act will boost the capital market and the economy, reiterating NGX’s commitment to adhering to government policy and driving growth in the capital market.

However, he further stressed that the introduction of excise taxes on non-alcoholic beverages and the education tax could also affect the economy.

According to him, these taxes could hamper the ability of companies affected by these developments to raise capital and pay dividends to investors because the policies are coming at a time the economy was undergoing a recovery.

Business Post reports that the event, which precisely took place in March 2022, was put together by NESG to access the impact of the 2021 Finance Act on the economy.

Continue Reading

Economy

Inflation in Nigeria Jumps to 16.82% in April 2022

Published

on

inflation rate Nigeria

By Aduragbemi Omiyale

The National Bureau of Statistics (NBS) on Tuesday disclosed that inflation in Nigeria increased by 16.82 per cent in April 2022 from the 15.92 per cent recorded in March 2022.

However, on a year-on-year basis, the rate moderated by 1.3 per cent as inflation was 18.12 per cent in the corresponding month of 2021.

The NBS disclosed that the percentage change in the average composite consumer price index (CPI) for the 12 months period ending April 2022 over the average of the CPI for the previous 12 months period was 16.45 per cent, 0.1 per cent lower than the 16.54 per cent recorded in March 2022.

It also stated that in the month under review, the urban inflation rate increased to 17.35 per cent (year-on-year) in April 2022 from 18.68 per cent recorded in April 2021, while the rural inflation rate increased to 16.32 per cent in April 2022 from 17.57 per cent in April 2021.

On a month-on-month basis, the urban index rose to 1.78 per cent in April 2022, up by 0.02 from the rate recorded in March 2022 at 1.76 per cent, while the rural index also rose to 1.74 per cent in April 2022, up by 0.01 from the rate that was recorded in March 2022 at 1.73 per cent.

The corresponding 12-month year-on-year average percentage change for the urban index is 17.01 per cent in April 2022, lower than 17.10 per cent reported in March 2022, while the corresponding rural inflation rate in April 2022 is 15.91 per cent compared to 16.00 per cent recorded in March 2022.

In the report, the stats agency said in April 2022, the composite food index rose by 18.37 per cent in contrast to the 22.72 per cent achieved in April 2021, attributing the increase to a hike in the prices of bread and cereals, food products n.e.c, potatoes, yam, and other tubers, wine, fish, meat, and oils.

On a month-on-month basis, the food sub-index increased to 2.00 per cent in April 2022, up by 0.01 per cent points from 1.99 per cent recorded in March 2022, the report added.

It was further stated that the average annual rate of change of the food sub-index for the 12-month period ending April 2022 over the previous 12-month average is 18.88 per cent, 0.34 per cent points from the average annual rate of change recorded in March 2022 at 19.21 per cent.

Continue Reading

Economy

OTC Securities Exchange Closes 0.02% Lower

Published

on

NASD OTC Securities Exchange

By Adedapo Adesanya

The NASD Over-the-Counter (OTC) Securities Exchange closed marginally lower by 0.02 per cent on Monday on the back of a price depreciation in Central Securities Clearing Systems (CSCS) Plc.

The stock, which was the only price loser yesterday, went down by 5 kobo or 0.29 per cent to sell at N16.95 per unit compared to the previous session’s N17.00 per unit.

At the close of transactions, it reduced the market capitalisation of the OTC securities exchange by N250 million to N1.05 trillion from N1.06 trillion and sliced the NASD Unlisted Securities Index (NSI) by 0.19 points to 807.56 points from 807.75 points.

Business Post observed that the level of activity during the session was low as the volume of securities recorded a decline of 99.8 per cent to 61,131 units from 7.5 million units, the value of trades also depreciated by 99.8 per cent to N4.6 million from N2.2 billion, while the number of deals remained unchanged at 11 deals.

AG Mortgage Bank Plc closed the session as the most traded stock by volume (year-to-date) with 2.3 billion units worth N1.2 billion, CSCS Plc was in second place with 661.6 million units worth N13.9 billion, while Food Concepts Plc held the third position with 94 million units worth N77.8 million.

But the most active stock by value (year-to-date) was CSCS Plc with 661.6 million units valued at N13.9 billion, VFD Group followed with 9.4 million units valued at N2.9 billion, and AG Mortgage Bank Plc with 2.3 billion units valued at N1.2 billion.

Continue Reading

Latest News on Business Post

Like Our Facebook Page

%d bloggers like this: