Economy
Worry as OPEC Cuts Nigeria’s Crude Oil Output Below 2024 Budget Benchmark
By Adedapo Adesanya
The Organisation of the Petroleum Exporting Countries and its allies (OPEC+) on Thursday asked Nigeria to produce about 1.5 million barrels of crude oil per day in 2024, lower than the 1.78 million barrels per day benchmark it proposed in the 2024 Appropriation Bill presented to the National Assembly on Wednesday for passage.
The output ceiling was around 1.8 million barrels per day before it was cut down to 1.5 million barrels yesterday at the group’s virtual meeting, a huge blow to Nigeria’s revenue target for the fiscal year.
OPEC had tasked three consultancies – IHS, Rystad Energy, and Wood Mackenzie – with verifying production figures for Nigeria, Angola, and Congo, and based on their recommendation, Nigeria has to produce at the new level.
Nigerian output has been in decline for years but has picked up in recent months, helped by more production offshore, which is less prone to security problems. According to the latest GDP data, Nigeria averaged 1.45 million barrels per day in the third quarter of the year.
The country has unsuccessfully planned on boosting its output to 1.8 million barrels, which in addition to condensate (excluded from the OPEC numbers) will total 2 million barrels per day.
However, since the country has not been able to attain its target due to security challenges like oil theft and pipeline vandalism as well as underinvestment, indications point that if the country sees no further disruptions, it should be able to meet up the 1.5 million barrels per day benchmark.
Oil, while contributing around 5 per cent to Nigeria’s gross domestic product, accounts for around 80 per cent of its foreign earnings.
During his presentation of the 2024 Budget tagged Budget of Renewed Hope on Wednesday, President Tinubu said the country was targeting 1.78 barrels per day and pegged oil price at $77.96 and the Naira exchange rate at N750/$1.
The President presented the 2024 budget proposal of N27.5trn before a joint session of the National Assembly in Abuja on Wednesday.
“Distinguished members of the National Assembly, the revised 2024-2026 Medium Term Expenditure Framework (MTEF) and Fiscal Strategy Paper (FSP) set out the parameters for the 2024 Budget.
“After a careful review of developments in the world oil market and domestic conditions, we have adopted a conservative oil price benchmark of $77.96 per barrel and a daily oil production estimate of 1.78 million barrels per day. We have also adopted a Naira to US Dollar exchange rate of N750 per US Dollar for 2024.
“Accordingly, an aggregate expenditure of N27.5 trillion is proposed for the Federal Government in 2024, of which the non-debt recurrent expenditure is N9.92 trillion while debt service is projected to be N8.25 trillion and capital expenditure is N8.7 trillion,” he said.
By Dipo Olowookere
Lower trading activity could not tie down Nigerian stocks on Thursday, as they rebounded by 0.98 per cent after the previous day’s loss caused by profit-taking.
The growth recorded by the Nigerian Exchange (NGX) Limited yesterday was driven by interest in Guinness Nigeria, First Holdco and others.
Guinness Nigeria and Zichis gained 10.00 per cent each to sell for N365.20 and N26.95, respectively, Access Holdings appreciated by 9.98 per cent to N29.20, First Holdco jumped by 9.91 per cent to N120.90, and UPDC REIT soared by 9.38 per cent to N14.00.
Conversely, Mecure lost 9.96 per cent to trade at N62.40, FTN Cocoa depreciated by 9.16 per cent to N8.63, Omatek slumped by 7.89 per cent to N1.75, Africa Prudential crashed by 4.44 per cent to N12.90, and Cornerstone Insurance fell by 4.35 per cent to N5.50.
A total of 36 stocks appreciated during the session, while 28 stocks depreciated, indicating a positive market breadth index and strong investor sentiment.
Customs Street experienced lower trading activity during the trading day, with market participants transacting 782.4 million equities for N56.3 billion in 46,273 deals, in contrast to the 1.3 billion equities worth N118.2 billion traded in 47,458 deals on Wednesday, representing a drop in the trading volume, value, and number of deals by 39.82 per cent, 52.37 per cent, and 2.50 per cent, respectively.
Bargain-hunting was seen across the key segments of the bourse, with the banking index up by 3.92 per cent. The industrial goods space rose by 1.27 per cent, the insurance sector appreciated by 0.75 per cent, the consumer goods counter improved by 0.63 per cent, and the energy segment grew by 0.04 per cent.
When the closing gong was struck to announce the end of trading activities for the day, the All-Share Index (ASI) advanced by 2,413.03 points to 247,831.40 points from 245,418.37 points, and the market capitalisation added N1.575 trillion to close at N159.894 trillion compared with the previous day’s N158.319 trillion.
By Adedapo Adesanya
Brent crude jumped over $100 per barrel on Thursday, rising by $6.62 or 7 per cent to $100.69 per barrel, as Yemen’s Houthis attacked two Saudi oil tankers in the Red Sea, causing further global supply disruptions following a near-halt in trade through the Strait of Hormuz.
The international crude oil benchmark has now climbed roughly 20 per cent in about two weeks as repeated attacks on commercial shipping, renewed fighting involving Iran, and mounting export disruptions have steadily erased expectations of a quick return to normal oil flows.
Also, the US West Texas Intermediate (WTI) crude chalked up $5.36 or 6.2 per cent to settle at $92.19 a barrel.
Houthi claimed that the group struck two Saudi oil tankers in the Bab el-Mandeb Strait after declaring a naval blockade of Saudi exports earlier this week.
Several vessels reportedly altered course or delayed transits through the chokepoint, threatening the export route Saudi Arabia has relied on to bypass disruptions in the Strait of Hormuz.
Market analysts noted that the escalation adds to the near-halt in Hormuz traffic and the sharp reduction in Iranian exports, intensifying concerns over near-term global availability.
Analysts estimate that the Strait of Hormuz and Bab el-Mandeb carry the equivalent of roughly a quarter of the world’s oil supply.
As a result of fewer shipments exiting the strait, loading activity within the Gulf has fallen to 2.5 million barrels per day over the past seven days, compared with 6 million barrels per day over the past 30 days
However, following the attacks, two Chinese supertankers carrying a combined 4 million barrels of Saudi Arabian oil managed to exit the Red Sea via the Bab el-Mandeb Strait on Thursday.
Meanwhile, US President Donald Trump promised “major military punishment” for Iran and its Houthi allies.
Goldman Sachs said Brent might exceed $120 a barrel in the fourth quarter and average $100 next year if the strait remains disrupted through 2027, with further upside if the Bab el-Mandeb Strait and Suez Canal also suffer persistent disruption.
Kazakhstan has begun cutting oil production after drone attacks shut down tanker loadings at the Caspian Pipeline Consortium terminal on the Black Sea.
Amid this development, seven core members of the Organisation of the Petroleum Exporting Countries and its allies (OPEC+), namely Saudi Arabia, Russia, Iraq, Kuwait, Algeria, Kazakhstan and Oman, are likely, when they meet on August 2, to increase their output target by about 188,000 barrels per day for September.
By Adedapo Adesanya
The National Insurance Commission (NAICOM) has said the passage of the National Insurance Regulatory Commission Bill by the Senate will unlock greater investment in Nigeria by strengthening regulatory oversight, enhancing investor confidence and creating a more transparent and accountable insurance industry.
Describing the development as a significant milestone in efforts to strengthen the regulatory framework of Nigeria’s insurance industry, the commission particularly praised the leadership of the Senate and the Chairman of the Senate Committee on Banking, Insurance and Other Financial Institutions, Mr Adetokunbo Mukail Abiru, for their roles in securing the successful passage of the Bill in the Red Chamber.
According to NAICOM, the proposed legislation will enhance regulatory oversight, improve transparency and accountability, and boost public confidence in the insurance sector.
The commission said the bill is expected to attract greater investment into the industry, promote sustainable growth, and deliver benefits to policyholders, insurance operators, and the wider economy.
NAICOM also noted that the Senate’s commitment to advancing reforms in the insurance sector would support the modernisation of insurance regulation and strengthen financial inclusion across the country.
It added that the passage of the Bill reflects the legislature’s resolve to protect the interests of citizens while promoting the stability of Nigeria’s financial system.
The Commission reaffirmed its readiness to ensure the effective implementation of the new legal framework once the Bill receives presidential assent, pledging continued collaboration with industry stakeholders to position the insurance sector as a key driver of national economic development.
Earlier this week, the Senate passed the much-anticipated bill to repeal and re-enact the law establishing the National Insurance Commission (NAICOM), paving the way for the regulatory agency to be renamed the Insurance Regulatory Commission (IRC).
The legislation, titled the Insurance Regulatory Commission (Establishment) Bill, 2026, was passed after the Senate considered and adopted the report of its committee on banking, insurance and other financial institutions.
According to lawmakers, the outgoing National Insurance Commission Act 1997 is outdated and does not adequately address the emerging economic growth, needs and development of the country’s insurance business and projections.
