Economy
Oil Depreciates as Cut Extension Divides OPEC
By Adedapo Adesanya
Leaders of the Organisation of the Petroleum Exporting Countries (OPEC) adjourned their virtual meeting on Monday when they could not agree on what to do on the tightening of supply of oil to the market.
Before the meeting, there had been reports that efforts would be made to extend the current output cut deal into next year, but some members were against this because of their present economic situation, including Nigeria.
As the talks were on and no agreement reached, the oil market suffered a slip on Monday as the Brent crude lost 59 cents or 1.22 per cent to sell at $47.59 per barrel, while the United States’ benchmark crude lost 33 cents or 0.72 per cent to trade at $45.20 per barrel.
The oil cartel, led by Saudi Arabia, will reconvene Tuesday, according to a short statement after the meeting.
The second day of talks will include additional members from a wider group known as OPEC+ led by Russia and other non-OPEC members.
Business Post had reported that speculation was rife that the cartel would agree to keep its production at a reduced level for a longer period of time in order to support oil prices as the economic slowdown caused by the coronavirus pandemic.
However with recent signs that several drug companies showed promising results from COVID-19 vaccine trials, the market was hopeful that demand would recover.
Despite this, some analysts warn that oil demand may never fully recover because the coronavirus travel restrictions among other preventive measures may have put a permanent dent in oil demand.
Additionally, the coalition has been restricting its output for months, straining its members especially major oil-dependents and there are tensions over some countries that overproduce.
There are predictions that the group may curtail current cut levels for at least three months in 2021, however, there are some countries resisting that idea.
One major pointer from Monday’s meeting was that many OPEC members are not happy with having to reduce output because of the strain on their budgets. However, oil prices have improved due to the cuts and overproducing may yet drive prices down.
OPEC and its allies agreed to cut production in April by about 10 million barrels per day through July. Then in August, as some cities around the world took steps to re-open their economies, the group upped its production by cutting 7.7 million barrels per day through year-end. They planned to increase production in January so that the cuts would be just 5.8 million barrels per day.
Amid this development, the producers also have to deal with Libya, which was exempt from cuts because of instability in the country. It has ramped up production to about 1 million barrels per day, up from a low of just 100,000 barrels less than six months ago.
A fresh news that may help the market in coming days is news that pharmaceutical company, Moderna intends to apply to the US Food and Drug Administration for authorization of its COVID-19 vaccine.
The company will ask the FDA to review an expanded data set showing the vaccine is 94.1 per cent effective at preventing COVID-19 and 100 per cent effective at preventing severe cases of the disease.
By Adedapo Adesanya
Nigeria received its first credit rating upgrade since 2012 from S&P Global Ratings, driven by improved oil market conditions and the country’s growing ability to refine and export crude locally.
The credit ratings agency upgraded the country’s rating by one notch to B, five levels below investment grade, according to a statement on Friday.
It raised its long-term foreign and local currency sovereign credit ratings on Nigeria to ‘B’ from ‘B-‘ and affirmed its ‘B’ short-term ratings. It also raised its long- and short-term Nigeria national scale ratings on the sovereign to ‘ngA+/ngA-1’ from ‘ngBBB+/ngA-2’.
S&P also cited Nigeria’s decision to liberalise the exchange rate as crucial to the development, and changed the outlook to stable.
The decision also comes as the federal government ruled out the reintroduction of subsidies on refined petroleum products, in order to avoid a return to larger budgetary deficits and drains on foreign currency (FX) liquidity.
S&P projected the general government deficit will widen to over 4 per cent of GDP on average during 2026 and 2027, a year of a general election.
It added that the implementation of reforms to broaden the tax base from very narrow levels is underpinning a steady decline in Nigeria’s debt-to-revenue ratio to 338 per cent in 2026 versus 500 per cent in 2023.
The agency said it could raise ratings over the next two years if fiscal outcomes improve significantly, either due to fiscal consolidation or structurally higher revenue, resulting in lower debt service costs.
It, however, warned that it could also lower the ratings if the implementation of Nigeria’s reform programme, particularly the series of critical steps taken to liberalise the exchange rate in 2023, reverses.
On the oil production forecast, S&P expects 2026 production to average approximately 1.66 million barrels per day, including condensates.
By Modupe Gbadeyanka
The Nigerian maritime sector may soon witness the inflow of $600 million in investment from APM Terminals.
On the sidelines of the ongoing Africa CEO Forum in Kigali, Rwanda, the Regional President of APM Terminals for Africa-Europe, Mr Igor van den Essen, informed President Bola Tinubu that his company was interested in deepening its investment in Nigeria.
According to a statement issued by the Special Adviser to the President of Information and Strategy, Mr Bayo Onanuga, the investment would be deployed in Apapa port modernisation, logistics infrastructure, and long-term private-sector investment in Nigeria’s maritime sector.
President Tinubu welcomed the investments, emphasising that Nigeria is repositioning itself for greater competitiveness through ongoing economic reforms and infrastructure modernisation.
He said the country is determined to move beyond structural bottlenecks and outdated systems, stressing the need for advanced technology, faster cargo processing, and improved operational efficiency across the nation’s ports.
He emphasised that Nigeria possesses the market scale, talent base, and economic potential to support globally competitive maritime and logistics infrastructure investments and called on other investors to take advantage of Nigeria’s reform outcomes.
Earlier, Mr Igor van den Essen lauded President Tinubu’s reform agenda and policy direction, which had strengthened investor confidence and created renewed momentum for long-term infrastructure investments.
He described Nigeria as a strategic stronghold within its African operations, referencing over 20 years of collaboration and substantial existing investments in the country’s port ecosystem.
He reaffirmed his company’s commitment to expanding investments in Nigeria and disclosed plans to support the development of world-class terminal infrastructure and technology-driven port operations.
He also commended Mr Tinubu for establishing the National Single Window (NSW), which has streamlined trade procedures, improved Customs coordination, and reduced delays in cargo clearance.
By Adedapo Adesanya
Dangote Petroleum Refinery has filed a new lawsuit against the federal government over the fuel import licences issued to marketers and the Nigerian National Petroleum Company (NNPC) Limited.
Last week, the Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA) issued licences to six marketers for the importation of 720,000 metric tonnes of Premium Motor Spirit, known as petrol.
The marketers are NIPCO, AA Rano, Matrix, Shafa, Pinnacle, and Bono. The development comes amid claims by the NMDPRA that the Dangote Petroleum Refinery now supplies over 90 per cent of Nigeria’s daily petrol consumption.
Dangote said in the filing that the licences issued undermine its operations and contravene the law, which it argues allows imports only when domestic supply falls short.
Named in the suit against the country is the Attorney General and Minister of Justice, Mr Lateef Fagbemi. The federal government can only be sued via his office.
The case signals renewed tensions almost a year after Dangote withdrew an earlier lawsuit challenging similar licences. That case sought to nullify import permits issued to the NNPC and several traders.
The new filing asks the Federal High Court in Lagos to set aside import permits issued or renewed by the NMDPRA, arguing they breach an earlier order to maintain the status quo.
Dangote ended the earlier lawsuit in July 2025 without explanation, leaving unresolved questions over competition and supply in one of Africa’s largest fuel markets.
Nigeria has long relied on petrol imports due to underperforming state refineries. However, Dangote’s 650,000 barrels per day capacity refinery was touted to end that dependence.
Despite the presence of the facility, imports have continued to cover supply gaps as the refinery ramps up output.
The NMDPRA did not issue a single import licence in the first quarter of 2026 because the Dangote refinery had the capacity to meet Nigeria’s petrol demand.
Business Post gathered that only upon intervention by President Bola Tinubu were the licenses granted for the second quarter by the NMDPRA.
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