Economy
Oil Slides 3% as Weak Economic Data, Higher Supply Grip Market
By Adedapo Adesanya
Oil dipped more than 3 per cent on Monday as the market was faced with weak economic data from China and an oversupply in the United States as a result of lower demand.
Consequently, the price of the Brent crude dropped $2.34 or 3.1 per cent to trade at $73.07 per barrel, while the West Texas Intermediate (WTI) lost $2.53 or 3.4 per cent to settle at $71.42 per barrel.
In the world’s largest exporting nation, China, factory activity growth slipped sharply in July as demand contracted for the first time in more than a year, in part on high product prices.
The weaker results in the private survey, mostly covering export-oriented and small manufacturers, broadly aligned with its weakest manufacturing sector expansion in 15 months, according to the Caixin China General Manufacturing Purchasing Managers’ Index (PMI).
In the world’s largest consuming and producing country, the US, manufacturing activity also showed signs of slowing.
The pace of growth slowed for the second straight month as spending rotates back to services from goods and shortages of raw materials persist, according to data from the Institute for Supply Management (ISM).
The ISM’s index of national factory activity fell to 59.5 last month, the lowest reading since January, from 60.6 in June.
The weaker economic data and resurgence of COVID cases combined with the higher production from the Organisation of the Petroleum Exporting Countries and allies (OPEC+) group to weigh on oil prices at the start of August.
From this month, the alliance is putting another 400,000 barrels per day on the market.
This is as a survey found out that the 13-member OPEC alone is estimated to have pumped in July its highest oil volumes since April 2020—at 26.72 million barrels per day up by up 610,000 barrels per day from June.
The market was also impacted by the highly infectious Delta variant which continues to cloud the outlook for mobility but the US has said it will not go into another lockdown.
Meanwhile, China has seen a small increase in cases, Thailand is set to expand its quasi-lockdown measures, while infections surged in Australia.
Even as cases continue to climb globally, analysts said higher vaccination rates would limit the need for the harsh lockdowns that gutted demand during the peak of the pandemic last year.
On the geopolitics front, tension is expected to build ahead as the US and Britain said on Sunday they believed Iran carried out an attack on an Israeli-managed petroleum product tanker off the coast of Oman on Thursday that killed a Briton and a Romanian.
This is happening as the two nations are seeking to revive a nuclear deal that, if successful, may pave the way for Iran to flood the market with more oil.
By Adedapo Adesanya
Oil prices fell nearly 7 per cent on Monday as optimism grew that the United States and Iran were moving closer to a peace deal that would reopen the Strait of Hormuz.
Brent crude futures were down by $7.24 or almost 7 per cent to $96.30 a barrel, and the US West Texas Intermediate (WTI) crude futures decreased by $6.30 or 6.5 per cent to trade at $90.88 per barrel.
Comments by President Donald Trump that diplomatic negotiations with Iran are advancing eased market fears of severe energy supply disruptions due to the Middle East conflict.
This is as a top negotiator of Iran, and its foreign minister was in Doha for talks with Qatar’s prime minister on a potential deal with the US to end the three-month-old war
Recently, both countries have downplayed expectations for an immediate peace agreement to end their three-month-old war, backing away from claims of an imminent breakthrough.
President Trump later revealed that he has instructed negotiators not to rush the process, asserting that the US naval blockade on Iranian ports will remain in full effect until a finalised accord is certified and signed.
Also, the US Secretary of State Marco Rubio has affirmed that the US government will exhaust diplomatic channels, also warning that it will handle Iran in “another way” if a good agreement cannot be secured, hinting at a potential return to active war.
The deal outlines a process to fully reopen the vital global shipping lane without tolls, resolving the global energy crunch. Iran would receive targeted sanctions relief and the gradual unfreezing of up to $20 billion to $25 billion in assets currently held in foreign banks.
Even if a peace deal is reached, analysts expect a return to normal oil flows through the strait will take months, while damaged oil and gas facilities are repaired. There is currently a supply shortfall of up to 11 million barrels per day of crude oil that does not go away immediately, even if a deal is reached soon.
Ship-tracking data showed three Liquefied Natural Gas (LNG) tankers passed through the strait in recent days, heading to Pakistan, China and India, as well as a supertanker with Iraqi crude for China after being stranded for nearly three months.
By Adedapo Adesanya
Nigeria’s economic growth rate eased in the first quarter of 2026 to 3.89 per cent year-on-year, as a slowdown in the oil sector offset gains recorded in the non-oil sector.
The economy, measured by Gross Domestic Product (GDP), slowed in the first three months of this year from the 4.07 per cent recorded in the previous quarter (Q4 2025), according to data released by the National Bureau of Statistics (NBS) on Monday. However, it was higher than the 3.13 per cent recorded in the first quarter of 2025.
In the first quarter of 2026, Nigeria recorded an average daily oil production of 1.55 million barrels per day, lower than 1.62 million barrels per day in the same quarter of 2025 and lower than the 1.58 million barrels per day in the fourth quarter of 2025.
The real growth of the oil sector was 2.57 (year-on-year) in Q1 2026, indicating an increase of 0.70 per cent compared with the 1.87 per cent in the corresponding quarter of 2025.
However, growth decreased by 4.22 per cent compared to 6.79 per cent in Q4 2025, and on a quarter-on-quarter basis, the oil sector recorded a growth rate of 9.31 per cent.
For the non-oil sector, it contributed 96.08 per cent to the nation’s GDP between January and March 2026, versus 96.03 per cent in the same period of last year and lower than 97.13 per cent in the fourth quarter of last year.
During the quarter under review, agriculture grew by 3.15 per cent. The growth of the industry sector stood at 3.50 per cent versus 3.42 per cent in the first quarter of last year, while the services sector recorded a growth of 4.31 per cent, in contrast to 4.33 per cent in the same quarter of 2025.
In terms of share of the GDP, the services sector contributed 57.73 per cent compared to 57.50 per cent in the first quarter of 2025.
In the quarter under review, aggregate GDP at basic price stood at N110.79 trillion in nominal terms, higher than N94.1 trillion in the first quarter of 2025 by 17.79 per cent.
By Adedapo Adesanya
The Centre for the Promotion of Private Enterprise (CPPE) has warned that Nigeria must not forgo its commitment to boosting domestic refining capacity amid growing advocacy for the importation of petroleum products.
In a statement, the centre explained that Nigeria must, therefore, avoid drifting into a policy regime that undermines domestic production in the name of competition or liberalisation.
The Chief Executive Officer (CEO) of the think tank, Mr Muda Yusuf, in a press release, warned that Nigeria is signalling to investors what happens if a multi-billion-dollar Dangote refinery investment of continental significance is confronted with regulatory uncertainty and policy headwinds.
The development comes as the management of the refinery has approached the court to battle against regulators, including the Nigerian National Petroleum Company (NNPC) and the Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA), over their decision to allow importation.
The dispute stems from a lawsuit filed by Dangote Refinery against the Attorney-General of the Federation, Mr Lateef Fagbemi, over fuel import licences granted to six marketers and the state oil company. The case has since widened the debate around local refining, market competition and the future direction of Nigeria’s downstream petroleum industry.
According to the centre, the increased call speaks to the very architecture of Nigeria’s economic philosophy, the future of industrialisation, the resilience of the macroeconomy and, ultimately, the preservation of the country’s economic sovereignty.
“No nation has ever imported its way to industrial greatness. Prosperous economies are built on production, refining, manufacturing, value addition and the strengthening of domestic productive capacity.
“Countries that become excessively dependent on imports inevitably export jobs, weaken domestic industries, erode local investments and mortgage their economic sovereignty.
“Nigeria must therefore avoid drifting into a policy regime that undermines domestic production in the name of competition or liberalisation,“ Mr Yusuf noted.
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