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Oil Continues Surge as US Bans Russian Energy Imports

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Russian energy imports

By Adedapo Adesanya

Oil further jumped on Tuesday as the United States announced a ban on Russian energy imports in response to the country’s invasion of Ukraine.

Brent crude oil traded higher by $3.22 or 2.5 per cent at $131.2 per barrel while the US West Texas Intermediate (WTI) was up by $2.51 or 2.0 per cent to sell for $127.3 per barrel after both benchmarks earlier jumped by 7 per cent on the news.

The ban, which was announced by the US President, Mr Joe Biden, includes not only Russian oil but also coal and liquefied natural gas (LNG).

“Today, I’m announcing the United States is targeting the main artery of Russia’s economy. We’re banning all imports of Russian oil and gas and energy. That means Russian oil will no longer be acceptable at US ports and the American people will deal another powerful blow to Putin’s war machine,” President Biden said in a White House announcement on Tuesday.

The President stressed that while the decision was made in close consultation with its European allies, noting that he understood not every ally would be in a position to join the United States in sanctioning Russia’s energy supplies.

This culminates reports which emerged that the US was considering banning imports of Russian oil without the participation of its European allies.

The US, which imports around 500,000 barrels per day of Russian crude and products, can afford to ban imports from Russia without severe consequences on its industry and economy, compared to Europe.

The United Kingdom announced its own restrictions on buying Russian oil imports while the European Union has made plans to reduce its dependence on Russian energy.

This will further deal a big blow to Russia as the market has already been self-sanctioning the Russian energy complex, with buyers avoiding the nation’s oil.

Meanwhile, the members of the International Energy Agency (IEA) are ready to release more oil from their strategic emergency reserves to tame the surging oil prices.

Last week, the IEA agreed that some of its members would release 60 million barrels of crude oil from various countries’ strategic petroleum reserves.

The US has agreed to release 30 million barrels of crude oil from its reserves. The rest of the IEA members in Europe and Asia will release the remaining 30 million barrels.

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.

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Economy

Nigeria’s GDP Grows by 3.11% in Q1, What Next?

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GDP

By Lukman Otunuga

There are two ways one could interpret Nigeria’s latest Gross Domestic Product (GDP) figure of 3.11% in Q1 of 2022.

The optimists will say the country’s economy grew for the sixth consecutive quarter in Q1 while pessimists may highlight how economic growth slowed for the third consecutive quarter.

Either way, Nigeria’s economy continues to display resilience against external and domestic risks. With the improvement in the non-oil sector driving growth, this may brighten the growth outlook. But could these be signs of Nigeria breaking away from the chains of oil reliance to derive growth from sustainable sources? It may be too early to come to any meaningful conclusion. However, the report is encouraging and illustrates progress made by the country in reclaiming stability post-Covid-19.

With economic conditions somewhat improving, the Central Bank of Nigeria (CBN) is unlikely to raise interest rates this week. Given how Africa’s largest economy has been able to maintain growth in the past six quarters on the back of loose monetary policies by the CBN, a rate hike could disrupt Nigeria’s economic recovery.

As the global war against inflation rages on, central banks are stepping up.

However, the CBN is likely to remain on the sidelines for now. Nevertheless, inflation is still a cause for concern with consumer prices accelerating for the third straight month to 16.82% in April 2022.

With the general elections around the corner, pre-election spending could translate to rising price pressures. On top of this, the widening policy divergence between the Federal Reserve and the CBN could punish the Naira.

It’s worth keeping in mind that the dollar remains heavily supported by aggressive Fed rate hike bets and is likely to remain strong for the rest of 2022. A powerful dollar is bad news for emerging market currencies including the Naira which continues to depreciate in both the official and unofficial markets.

Lukman Otunuga is the Senior Research Analyst at FXTM

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Economy

NGX All Share Index Weakens Further by 0.13%

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All-Share Index

By Dipo Olowookere

The bearish sentiment on the floor of the Nigerian Exchange (NGX) Limited continued on Monday as the bourse further depreciated by 0.13 per cent.

Sustained profit-taking especially in the industrial goods sector contributed to the decline suffered during the session as the All Share Index (ASI) slumped by 68.45 points to close at 52,911.51 points compared with the previous session’s 52,979.96 points.

As for the market capitalisation, it depreciated by N37 billion amid sell-offs in 24 stocks to settle at N28.525 trillion as against last Friday’s closing value of N28.562 trillion.

On the first trading day of this week, the insurance sector depleted by 2.32 per cent, the industrial goods sector fell by 0.09 per cent, while the energy, banking and consumer goods counters increased by 0.28 per cent, 0.10 per cent and 0.05 per cent respectively.

Presco led the losers’ chart yesterday with a price decline of 10.00 per cent to trade at N180.00, Global Spectrum Energy Services lost 9.97 per cent to finish at N3.07, Neimeth fell by 9.66 per cent to N1.59, UAC Nigeria depreciated by 8.33 per cent to N13.20, while NEM Insurance retreated by 7.74 per cent to N4.05.

The gainers’ log had 22 members on Monday, with Conoil leading after its value improved by 9.95 per cent to N34.25. MRS Oil gained 9.93 per cent to quote at N14.95, McNichols appreciated by 9.86 per cent to N2.34, Academy Press increased its price by 9.76 per cent to N1.35, while NPF Microfinance Bank expanded by 8.02 per cent to N2.02.

On the activity chart, a total of 263.3 million stocks worth N3.6 billion exchanged hands in 4,856 deals during the session compared with 436.6 million stocks worth N3.2 billion bought and sold in 4,716 deals in the preceding session. This implied that the volume of trades depreciated by 39.68 per cent, while the value of trades and the number of deals increased by 10.15 per cent and 2.97 per cent respectively.

Jaiz Bank closed the day as the most active stock with the sale of 114.0 million units valued at N101.8 million, GTCO transacted 12.9 million shares for N302.8 million, Transcorp exchanged 12.8 million stocks worth N16.7 million, Access Holdings traded 11.7 million equities valued at N115.7 million, while Zenith Bank sold 8.6 million shares for N207.0 million.

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Economy

CSCS Leads NASD Bourse to 0.39% Loss

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CSCS Stocks

By Adedapo Adesanya

The National Association of Securities Dealers (NASD) Over-the-Counter (OTC) Securities Exchange opened the week on a bearish note as it lost 0.39 per cent on Monday on the back of a slip in the price of Central Securities Clearing System (CSCS) Plc.

The share price of CSCS Plc went down by N1.23 or 7.8 per cent during the session to N15.72 per unit from the previous session’s N16.95 per unit.

The decline posted by the stock outshone the gains printed by FrieslandCampina WAMCO Nigeria Plc and NASD Plc at the unlisted securities market yesterday.

FrieslandCampina recorded a 0.9 per cent or N1 growth to close at N110.00 per unit as against the N109.00 per unit it closed last Friday, while NASD Plc appreciated by 28 kobo or 2.0 per cent to trade at N14.00 per share in contrast to the last price of N13.72 per share.

But at the close of transactions, the market capitalisation of the NASD bourse shed N4.07 billion to settle at N1.03 trillion as against the preceding session’s N1.04 trillion, while the NASD Unlisted Securities Index (NSI) fell by 3.11 points to 789.94 points from 793.05 points.

At the market yesterday, the volume of securities traded by investors depreciated by 60.9 per cent to 3.8 million units from 9.6 million units, the value of securities, however, jumped by 36.9 per cent to N63.7 million from N46.5 million, while the number of trades went down by 45.8 per cent to 13 deals from 24 deals.

AG Mortgage Bank Plc remained the most traded stock by volume (year-to-date) with 2.3 billion units valued at N1.2 billion, CSCS Plc stood in second place with 662.2 million units worth N13.9 billion, while Food Concepts Plc was in third place with 134.0 million units valued at N115.0 million.

In terms of the most active stock by value (year-to-date), CSCS Plc remained on top with 662.2 million units exchanged for N13.9 billion, VFD Group was in second place with 9.4 million units valued at N2.9 billion, while AG Mortgage Bank Plc was in third place with 2.3 billion units worth N1.2 billion.

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