Economy

Strong demand pushes oil near $80

Written by Maritime First

…NACC, stakeholders chart path to trade growth via PPP model***

Brent crude oil rose for a sixth day yesterday to hit its highest since November 2014 at over $75 per barrel.

This development is buoyed by expectations that supplies will tighten just as demand reaches record levels.

Brent crude futures marked $75.27 a barrel yesterday.

Brent’s six-day rising streak is the longest such string of gains since December, with prices up more than 20 per cent from 2018-lows plumbed in February.

U.S. West Texas Intermediate (WTI) crude futures were at $69.17 a barrel.

Markets have been lifted by supply cuts, which were introduced in 2017 with the aim of propping up the market, led by the Organisation of the Petroleum Exporting Countries (OPEC).

The potential of renewed United States (U.S.) sanctions against Iran is also pushing prices higher.

The U.S. has until May 12 to decide whether it will leave the Iran nuclear deal and re-impose sanctions against OPEC’s third-largest producer.

This would further tighten global supplies.

“Crude prices are now sitting at the highest levels in three years, reflecting ongoing concerns around geopolitical tensions in the Middle East, which is the source of nearly half of the world’s oil supply,’’ ANZ bank said.

OPEC’s efforts to tighten markets are being led by Saudi Arabia, the top exporter Saudi Arabia, where state-controlled oil firm Saudi Aramco, is pushing for higher prices ahead of a partial listing planned for later this year or 2019.

“Oil strength is coming from Saudi Arabia’s recent commitment to get oil back up to between $70 to 80 per barrel and inventory levels that are back in the normal range,’’ said William O’Loughlin, investment analyst at Australia’s Rivkin Securities.

OPEC’s supply curtailments and the threat of new sanctions are occurring just as demand in Asia, the world’s biggest oil consuming region, has risen to a record as new and expanded refineries startup from China to Vietnam.

Meanwhile, the Nigerian-American Chamber of Commerce (NACC) and stakeholders in the shipping industry have advocated improved public-private partnership (PPP) as a way of improving trade growth and putting the country back on the path of recovery.

According to the chamber, boosting the PPP initiative in the shipping sector would boost freight revenue for local shippers, earn and help conserve foreign exchange and help develop indigenous capacity for global competitiveness.

Speaking during a breakfast meeting organised by the NACC, the chamber’s Deputy President, Otunba Oluwatoyin Akomolafe emphasised the need to promote and deepen the development of the shipping sector by boosting public-private participation in that critical sector, considering that the nation’s earnings from oil are dwindling.

“Nigeria has a strategic nation and with a growing shipping sector is plagued by many challenges. One of these is the low level of public-private partnership in the shipping sector.

A research carried out states that Nigeria generates more than 70% of the cargo throughput in West and Central Africa but presently, the sector is characterised by the domination of foreign flag vessels especially those of developed market economies”, he said.

The Guest speaker, Executive Secretary, Nigerian Shippers Council, Barrister Hassan Bello also established a noteworthy interrelationship between the nation’s economy and its weak infrastructure, highlighting that a poor infrastructure would restrict the growth and development of an economy.

Bello said that the deficit of infrastructure is in most part, responsible for the weak economy of most African countries.

“The deficit of infrastructure is in most part, responsible for the weak economy of most African countries”, he said.

He identified Marine transport as the base of shipping, adducing strong reasons for ports and shipping development, noting that over 90% of Nigeria’s international trade is carried on through shipping, saying that infrastructure includes ports, rail, highway, harbour, inland dry ports, pipelines, Truck Transit Parks, and Aviation.

Nation with additional report from Guardian NG

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Maritime First