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Iran sanctions seen keeping oil above $75, but 2019 demand outlook darkens

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…As FG shifts burden of TSA transaction cost to payers***

Oil is likely to stay above $75 a barrel fueled by supply disruptions exacerbated by U.S. sanctions on Iran.

However, further gains could be limited as economists and analysts see demand growth slowing next year due to trade wars and economic weakness.

A survey of 46 economists and analysts forecast Brent crude to average $76.88 a barrel in 2019, up from the $73.75 forecast in September.

The price is expected to average $74.48 in 2018, versus the $73.57 average so far this year.

Analysts, who spoke to Reuters, said demand was expected to decelerate in 2019 if concern over a widespread economic slowdown proved to be justified.

Overall, global oil demand is projected to grow by between 1.1 and 1.5 million barrels per day (bpd) in 2019, a range that generally falls short of the 1.4 million bpd forecast for next year by the Paris-based International Energy Agency in October.

Brent neared $87 a barrel earlier in the year following U.S. efforts to isolate Iran through renewed sanctions, but prices have since edged off those highs and Brent is now around $76.

Analysts worry that there is a lack of spare capacity to deal with potential outages elsewhere once the sanctions take effect on Nov. 4.

“On the supply side, concerns (about) falling supplies from a number of OPEC producers – primarily Iran, owing to the renewed U.S. sanctions – and also Venezuela, Angola, Libya and Nigeria, will maintain upward pressure on prices,” said Cailin Birch, an analyst at the Economist Intelligence Unit.

The U.S. sanctions against Iran’s crude exports are expected to tighten supply, especially to Asia, which takes most of the country’s shipments.

Apart from Saudi Arabia and Russia, few producers can fill any gap left by Iran, according to Frank Schallenberger, head of commodity research at LBBW.

“I expect (Saudi Arabia and Russia) to raise output if necessary – as a shortage on the supply side and an even higher oil price could be a major risk to the global economy in 2019,” Schallenberger added.

Despite concerns about supply, analysts said headwinds to global growth could hurt demand in the coming year, particularly as the United States and China engage in a trade war that has imposed billions of dollars in tariffs on each other’s goods.

On Tuesday, at the Reuters Commodities Summit, Vitol Chief Executive Russell Hardy, said the firm had lowered its outlook for oil demand growth to 1.3 million bpd from 1.5 million previously.

“Potential variables for global oil demand include U.S.-China trade protectionist policies, emerging-market currency woes and the effects of tighter monetary policy,” said Benjamin Lu, a commodities analyst with Phillip Futures.

The IEA said world oil consumption would top 100 million bpd in the final quarter of this year, putting upward pressure on prices, although emerging-market crises and trade disputes could dent this demand.

Major producers led by the Organization of Petroleum Exporting Countries (OPEC) agreed in June to relax their oil production cuts, but the group said it may need to change course because of rising inventories and economic uncertainties.

Six of the analysts surveyed expected supply from non-OPEC producers to increase by an average 1.6 million bpd next year, mainly driven by gains in U.S. shale output, which has been constrained by a lack of available transportation capacity.

“Current pipeline bottlenecks (in the U.S.) prove to be a short-term obstacle …

“The situation should improve next year thanks to the commissioning of additional pipeline capacities,” said Carsten Fritsch, senior commodity analyst at Commerzbank.

The price gap between Brent and WTI crude is expected to narrow as a result of new pipeline capacity coming onstream in the U.S. Midwest next year that will release new U.S. supply on to the global market, Fritsch said.

U.S. crude futures CLc1 were forecast to average $70.15 a barrel in 2019, compared with the $67.48 consensus last month.

In the meantime, the Federal government has  decided to shift the burden of the one percent service charge for payments into the Treasury Single Account (TSA) to payers. This is the highlight of a newly approved TSA tariff model unveiled at a  one-day stakeholder sensitisation exercise on TSA e-Collection charges held in Abuja on Tuesday, organised by the Office of the Accountant General of the Federation, AGF.

The new tariff model  mandates that service charge on payments to ministries, departments and agencies (MDAs) from today, November 01, 2018  would be borne by the payer.

According to information emanating from the office the AGF, Ahmed Idris, all funds collection into the TSA would require payers to bear the transaction cost. The new model would therefore replace the previous one wherein the merchant in this case, the federal government, bore the charges on all transactions on behalf of payers.

In the previous tariff regime, the federal government owed the technology service providers and the participating deposit money banks up to two years arrears of service charge. At commencement, all players, including all commercial banks, SystemSpecs and the Central Bank of Nigeria (CBN), agreed that a fee of 1% of funds collected is payable to SystemSpecs, the payment technology platform provider and the deposit money bank payment outlets.

Additional report from Vanguard

Economy

Eid-el-Fitr: Tinubu Urges Sacrifice, Integrity For National Rebirth

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Eid-el-Fitr: Tinubu urges sacrifice, integrity for national rebirth

 President Bola Tinubu has urged Nigerians to continue to make sacrifices and exhibit integrity for national development.

Tinubu said this after observing the Eid-el-Fitr prayer at the Eid Ground at Dodon Barracks on Wednesday in Lagos.

The President also called on Nigerians to continue to have faith in his government and remain patriotic citizens.

Tinubu said that the Renewed Hope Agenda of his administration, aimed at bringing prosperity to Nigerians, was being diligently implemented.

Encouraging Muslims to extend the values of sacrifice and resilience beyond the fasting period, Tinubu emphasised the need for Nigerians to prioritise the exhibition of love for their country.

‘’The resilience and sacrifice that we have shown and made during these months should be preserved.

“Be a kind and cheerful giver. We must love our country more than any other country because this is the only one we have.

‘’We must continue to protect the integrity of our government and leadership. The Renewed Hope Agenda is alive, well and fine, and Nigerians should continue to be very hopeful. Without hope, there is no salvation.

“Without hope, there is no development. Without hope, there is no life. Eid Mubarak,’’ the President said at the end of the prayers led by the Chief Imam of Lagos State, Sheikh Sulaiman Abou-Nolla.

Earlier in his sermon, the Chief Imam urged Nigerians to shun all acts of violence, ensure peaceful co-existence, and continue to have faith in the country.

He asked those in leadership positions to remain faithful to their oaths of office and work towards alleviating the suffering of the less privileged.

‘‘Let us not forget our brothers and sisters in Gaza and other areas of conflict,’’ the Chief Imam said.

He offered prayers of God’s guidance, wisdom, and protection for the President and the Lagos State government, as well as for peace and stability in the country.

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Economy

Lawmaker Secures Release of 4 Persons Involved in Illegal Arms Manufacturing in Delta

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Lawmaker Secures Release of 4 Persons Involved in Illegal Arms Manufacturing in Delta

Sen. Ned Nwoko (PDP-Delta), on Wednesday, disclosed that he had secured the release of four family members involved in manufacturing arms at the Onicha-Olona Illegal Arms Factory in Delta.

Nwoko representing Delta North Senatorial District, who disclosed this in an interview in Abuja, said that the release of the four persons was through collaborative efforts.

On March 12, troops of 63 Brigade, Asaba, uncovered an illegal arms manufacturing factory in Onicha-Olona, Delta North Senatorial District and arrested eight family members in connection with the crime.

Nwoko disclosed that efforts have been made to ensure fair treatment for those involved, balancing justice with the opportunity for rehabilitation and contribution to society.

“Following my recent visit to the headquarters of 63 Brigade, Asaba and productive discussions with the Brigade Commander, I am pleased to announce progress in addressing the situation regarding the illegal arms factory discovered in the Onicha-Olona community, Delta.

“Efforts have been made to ensure fair treatment for those involved, balancing justice with the opportunity for rehabilitation and contribution to society.

“I am pleased to reveal that through collaborative efforts, I have successfully secured the release of four family members implicated in the illegal activity.

“However, our commitment to upholding the law remains unwavering, and endeavours continue for fair judgment and potential pardon for the remaining four individuals,” he said.

The lawmaker stressed that the underlying issue highlighted by the discovery, however, remained of paramount importance.

“We must seize the opportunity to redirect the talents demonstrated by those involved towards lawful and productive endeavours.

“The young man in the family, known for his passion and ability to build drones, exemplifies this potential.

“His skills should be harnessed and put to good use,” he said.

Nwoko added that the Industrial Revolution served as a pertinent historical precedent where individual efforts catalysed transformative change and made possible by governments that created conducive environments.

“We can emulate this model here. We can provide support and opportunities for talented individuals like the young drone builder, and stimulate a new wave of innovation and economic growth in Nigeria.

“As previously stated, Nigeria’s economy faces significant challenges exacerbated by escalating imports, particularly in the realm of arms and weaponry.

“Therefore, we must harness our indigenous talents for the greater good and bolster our local industries,” he said.

Nwoko further said that the Defence Industries Corporation of Nigeria (DICON), as well as the Ministry of Science and Technology, have crucial roles to play in this regard.

According to him, by engaging with individuals possessing such skills, we can offer them legal avenues for their expertise to flourish.

“The aim is not only to prevent the proliferation of illegal arms or other weapons manufacturing but also to channel these talents towards legitimate industries for national development.

“I reiterate the need for the government to support and integrate such offenders with specialised skills and talents into the formal economy.

“This initiative should focus on recognising their capabilities and providing opportunities for them to contribute to the development of our local indigenous technology.

“As noted earlier, an individual capable of modifying an AK-47 magazine, originally designed to hold 30 rounds, to accommodate 60 rounds using rudimentary equipment, holds immense potential for greater achievements.

”Such individual can do more with proper legal support and access to adequate resources.”

He disclosed that he was committed to proposing or supporting a new law aimed at assisting talented and skilful individuals involved in illegal activities and also partnering with law enforcement agencies in these endeavours.

“I am committed to proposing or supporting a new law aimed at assisting talented and skilful individuals involved in illegal activities and also partner with law enforcement agencies in these endeavours.”

“They have the intelligence and insights of the potential beneficiaries of this “amnesty” drive towards creating a new cadre of indigenous technologists.

“This law would establish an agency dedicated to providing government support and resources to rehabilitate and engage these individuals in legal and productive activities.

“I tentatively suggest naming this proposed law the “National Talent Rehabilitation and Integration Act”.

“This legislation will not only focus on rehabilitation but also on harnessing the skills and talents of offenders for the benefit of society.

“By providing a structured environment and necessary support, this agency will facilitate the transition of individuals from illicit activities to lawful and productive ventures.

”And they will be contributing to both their personal rehabilitation and national development,” Nwoko added.

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Economy

NGX Market Capitalisation Gains N836bn

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Stock Market Gains N18bn; FTN Cocoa Processors, Prestige Assurance lead Losers’ Chart 

…Tantalizers, NASCON lead the losers’ chart 

The Nigerian Exchange Ltd.(NGX) market capitalisation, which opened at N57.697 trillion on Tuesday, gained N836 billion or 1.45 percent closing at N58.533 trillion.

Also, the All-Share Index rose by 1.45 percent or 1,480 points to close at 103,524.44, as against 102,044.84 recorded on Monday.

As a result, the Year-To-Date (YTD) return rose to 38.45 percent.

Interest in Telco heavyweight and Tier-one banks such as MTN Nigeria, UBA, Access Corporation, Guaranty Trust Holding Company(GTCO), and sustained interest in Transcorp Power(TransPower) kept the market in the green.

Market breadth closed positive with 35 gainers and 14 losers.

On the gainer’s chart, UBA led in percentage terms of 10 to close at N25.30, followed by MTN by 9.98 percent to close at N243.50 per share.

Julius Berger also gained 9.71 percent to close at N61, While Access Corporation rose by 9.51 percent to close at N22.45 per share.

Veritas Kapital Assurance went up by 9.38 percent to close at 70k per share.

Conversely, Tantalizers led the loser’s chart by 7.89 percent to close at 35k, and National Salt Company of Nigeria(NASCON) trailed by 6.77 percent to close at N53.70.

Morison Industries Plc shed 6.62 percent to close at N1.41, C&I Leasing lost 6.45 percent to close at N3.48, while Cutix Plc dropped 6.30 percent to close at N2.53 per share.

However, analysis of the market activities showed trade turnover settled lower, relative to the previous session.

The value of transactions was also down by 16.76 percent.

A total of 565.79 million shares valued at N14.23 billion were exchanged in 11,519 deals,  compared to 436.90 million shares valued at N17.09 billion exchanged in 11,344 deals traded on Monday.

On the activity chart, Transcorp led in volume with 170.72 million shares traded at a value of N3.13 billion, Access Corporation followed by 48.57 million shares valued at N1.06 billion.

GTCO sold 39.04 million shares worth N165.80 million, Jaiz Bank traded 36.78 million shares valued at N72.51 million and UBA transacted 31.96 million shares valued at N796.24 million

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