Nigeria has once again defaulted in the agreement reached by the Organisation of Petroleum Exporting Countries (OPEC) to cut crude production through the first half of 2019.
A survey by S & P Global Platts revealed that Nigeria, which is Africa’s biggest oil producer, pumped 1.88 million barrels of crude per day in February 2019. This is a contrast compared to the 1.87 million barrels per day the country produced in January.
The latest increase in crude production represents a 0.01 million barrels per day increase for the 4th consecutive month.
Recall that last year, some of the world’s largest crude producers (under the auspices of OPEC and its allies) reached a deal to cut oil production in the first half of 2019 in a bid to help shore up oil prices and stabilise the market. The terms of the deal reached by OPEC with other allied oil-producing countries (Russia inclusive) was to cut 1.2 million barrels per day (bpd) off the market.
Therefore, crude oil production quota was given to all OPEC and non-OPEC Countries in terms of volume of oil to be produced monthly. Contrary to 1.685 bpd that Nigeria was expected to produce in February, the country produced 1.88 bpd.
Also, the OPEC deal entails that the 15-member OPEC cartel reduces its output by 800,000 bpd, while Russia and other allied producers reduce production by 400,000 bpd. The decision reached by OPEC became necessary when the oil market found itself near the bottom of its worst price fall since the global financial crisis of 2008. In recent months, the crashes in the prices of crude oil have been piling up pressure on the budgets of oil-producing states.
Some Key Metrics
- OPEC cartel produced 0.17 bpb crude oil higher than the February allocation. Specifically, OPEC set 25.937 million bpb target for the month, however, it produced 26.11 million bpb.
- Despite the non-compliance of five (5) countries, 11 countries achieved 79% of committed cuts in February. That is, OPEC could not cut 170,000 bpd.
- Saudi Arabia continues to cut crude oil production. In February 2019, the country was given an allocation of 10.311 bpb, it, however, produced lower with 10.15 bpb.
- Venezuela’s struggles under US sanctions led OPEC’s crude oil production in February modestly lower to 30.80 million bpd
- Iran and Venezuela were exempted from the quota due to U.S sanctions, while Libya was also exempted due to instability affecting the country’s output.
- Nigeria, Ecuador, Equatorial Guinea, Gabon, Iraq and Nigeria all produced higher output than the February monthly allocation of OPEC.
Saudi Arabia leads the coalition
According to the S&P Global Platts’ survey, Saudi Arabia has made good on its pledge to lead by example, slashing its output to 10.15 million bpd in February 2019. This figure shows that the country produced 160,000 bpd below its quota of 10.31 million bpd, representing the country’s lowest output level since May 2018.
Also, Iran managed to keep production steady in February, at 2.72 million bpd. It was revealed that several buyers in the month took advantage of sanctions’ waivers the US granted to eight countries to purchase Iranian crude. However, the waivers will expire in May, and it is yet unsure whether the US will extend them or not.
Some competing forces
From the collapse of Venezuela’s oil industry to U.S. sanction on Iran’s crude exports, some countries like Nigeria are either reneging or reluctantly keeping the OPEC’s agreement. And this does not look good on the oil market.
Previously, Nigeria was exempted from OPEC’s cuts. It, however, agreed to a quota under the current accord. But the country has already failed to produce within the committed output, pumping an 190,000 bpd above its cap and producing 1.88 million bpd in February.
According to Plat’s survey data, at the end of February, Venezuela had 10.8 million barrels of crude sitting dockside without a buyer. The country’s output is down 910,000 bpd in two years and the lowest since an industry strike in late 2002 and early 2003.
With US sanctions imposed on the country, Venezuela’s oil production has been declining for years due to under investment, technical problems and labour issues. The country produced 1.10 million bpb in February, down by 60,000 bpd month on month, as it has struggled to sell its crude.
Despite Trump’s sanctions, oil Prices likely to rise
The United States’ President, Donald Trump, has repeatedly criticised OPEC on its decision making, claiming prices should be lower. In his latest tweet on the matter, he told OPEC that the world cannot handle a hike. But many people interpreted his “world” to mean his “America” which is one of the world’s biggest consumers of petroleum.
Oil prices getting too high. OPEC, please relax and take it easy. World cannot take a price hike – fragile!
— Donald J. Trump (@realDonaldTrump) February 25, 2019
But despite Trump’s rant, OPEC is committed to maintaining its crude cuts. Saudi Arabia’s energy minister, Khalid al-Falih, recently said in an interview granted by CNBC, that he’s positive OPEC and partnered nations will meet their production cut commitments to balance oil markets in 2019, despite what he described as a slower than anticipated pace by some countries.
U.S. budget suffers a deficit of $3.1 trillion in 2020, as pandemic slams the economy
The U.S. budget deficit eclipsed $3.1 trillion in the fiscal year that ended Sept. 30.
The new White House data released evidently shows that the huge surge in spending to confront the economic fallout of the coronavirus pandemic fueled a historic increase in national debt; thereby, creating an unprecedented budget deficit.
According to the exclusive government data released on Friday, the U.S. budget deficit eclipsed $3.1 trillion in the fiscal year that ended Sept. 30. This is adjudged to be by far the biggest one-year gap in U.S history.
The data is a stark reflection of the staggering blow that the COVID-19 pandemic has dealt to the U.S. economy. The deficit – which is the gap between government spending and tax revenue – shows the dramatic surge in spending that the U.S. government approved, in order to contain the pandemic’s fallout earlier this year.
According to the data jointly released by the White House and the Treasury Department, the deficit last year was about $1 trillion, which represented an elevated level but pales in comparison to the 2020 tally. For 2020, the government spent $6.552 trillion, up from $4.447 trillion a year ago. The government brought in $3.420 trillion in tax revenue in 2020, a slight decrease from 2019.
Trump fell far short of his pledge to curb the national debt from the 2016 presidential campaign when he argued “We’ve got to get rid of the $19 trillion in debt.” He spearheaded a Republican effort to approve $2 trillion in tax cuts in 2017 and also worked with Congress to approve large spending increases in 2018.
What they are saying
According to Marc Goldwein, a Budget Expert at the Committee for a Responsible Federal Budget, which advocates for reducing the deficit, “Most of the increase in the deficit relative to last year is higher spending as a result of covid relief.”
According to Angela Hanks, Deputy Executive Director of the Groundwork Collaborative, a left-leaning group,
“America’s failure to adequately stimulate the economy led to a tepid recovery from the Great Recession, and lawmakers should avoid making the same mistake again. Congress must still pass more spending to prevent people from going hungry or losing their homes.”
Brian Riedl, a Budget Analyst at the conservative-leaning Manhattan Institute, warned that America’s jobs recovery has already picked up the “low-hanging fruit” positions that were easy to bring back.
Other jobs in sectors such as the hospitality, airline, and restaurant industry will be harder to bring back, particularly as the U.S. braces for an increase in coronavirus cases during the cold winter months. She added that “The growth is leveling off. The economic recovery is leveling off, which means the deficit numbers will continue to be pretty bad.”
Why this matters
The new figures come as the White House and House Speaker, Nancy Pelosi, (D-Calif.), are locked in negotiations about another round of economic relief, which could include another $2 trillion in aid. Spending like this could further add to the government’s budget deficit.
A range of Economic Experts across the political spectrum, including Federal Reserve Chairman, JH Powell, have said the assistance is necessary to prevent the economic recovery from flagging and keep millions from falling into poverty. Businesses have picked up the pace of layoffs in recent weeks, particularly at travel-related companies.
- Numerous Republican lawmakers have bristled at the federal spending spree in response to the pandemic, and the surging deficit may fuel their reluctance to authorize additional relief.
- Conservatives alarmed by the deficit may also push hard for its reduction, should Democratic Presidential nominee – Joe Biden, win the election. This will set the stage for a revival of the fierce budget battles that characterized much of the Obama administration.
- Despite the increase of the deficit, economists and lawmakers from both sides of the political aisle have clamored for more government spending.
- The bipartisan consensus that approved the big jump in spending earlier this year appears to have waned, and some Senate Republicans have signaled they are not comfortable with the big-spending package that the White House is now negotiating with Pelosi.
What you should know
- The government traditionally runs some sort of budget deficit, and it finances the gap between taxes and spending by issuing debt. Interest rates are low, which has made it relatively inexpensive to issue debt. But the debt totals have risen markedly during the Trump administration, even before the pandemic, upending his 2016 campaign vow to completely eliminate the debt over eight years.
- The debt when Trump entered office was about $14.4 trillion. It now stands at around $21 trillion. The previous highest deficit recorded was in 2009, when it came in at $1.4 trillion. That is less than half of the 2020′s tally.
- In March and April, Congress approved close to $3 trillion in spending programs, in response to the pandemic. This included hundreds of billion of dollars in aid for the unemployed and small businesses, as well as $1,200 stimulus checks for millions of Americans.
- The economy fell into a steep recession earlier this year as many businesses shut down and sent workers home because of the virus outbreak.
- The government’s spending imbalance skyrocketed in April and June as the government’s coronavirus relief efforts were implemented and the economy cratered. This is because the gap between federal spending and collected tax revenue grew to unprecedented levels. The monthly deficit jumped to $738billion for April alone, which was a record until the monthly deficit for June came in at $864 billion. The June deficit was bigger than the entire 12-month deficit in 2018.
- Spending soared across government agencies this year. The Department of Education, for instance, spent 96 percent more than it had last fiscal year, while the Small Business Administration spent close to $600 billion more than prior years, due to its implementation of the Paycheck Protection Program for small businesses hurt by the virus.
- Monthly deficits have since subsided somewhat, both as the pace of new government spending slowed and the U.S. economy began to bounce back and the unemployment rate fell, resulting in greater tax revenues. In August, the monthly federal deficit came in at $200 billion as the amount of federal spending was halved from June. But this decrease in spending has come amid signs that the economic recovery is slowing, which has prompted the White House and some lawmakers to consider more aid.
What to expect
On Wednesday, Trump told the New York Economic Club that reducing the federal debt would be a priority of his second administration, even as he urged Congress to spend more than $1.8 trillion on an additional relief package.
Trump also said faster economic growth would erase the U.S. debt burden. Although, budget experts say spending cuts or tax hikes would be necessary to do so.
Explore Data on the Nairametrics Research Website
Explore Some Advanced Financial Calculators On Nairametrics
Debt burden of the least developed nations rises to $744 billion – World Bank
Total external debt of the least developed countries under the DSSI increased to $744 billion in 2019.
The total external debt of the least developed countries under the Debt Service Suspension Initiative (DSSI) has increased by 9.55% to $744 billion in 2019.
This was disclosed in the World Bank’s International Debt Statistics 2021 released in Washington D.C. on Monday.
According to the report, the figure was equivalent on average to one-third of the countries’ combined gross national income.
It stated, “Lending from private creditors was the fastest-growing component of the external debt of DSSI-eligible borrowers, up five-fold since 2010. Obligations to private creditors totaled $102 billion at the end of 2019. The debt stock of DSSI-eligible countries to official bilateral creditors composed mostly of Group of 20 (G-20) countries, reached $178 billion in 2019 and accounted for 27% of the long-term debt stock of low-income countries.”
According to the report, this highlights an urgent need for creditors and borrowers alike to collaborate and stave off the growing risk of sovereign-debt crises triggered by the COVID-19 pandemic.
It added that the pace of debt accumulation for these countries was near twice the rate of other low- and middle-income countries in 2019.
The report said that in response to an urgent need for greater debt transparency, this edition provided more detailed and disaggregated data on external debt than ever before in its nearly 70-year history.
According to the report, details include breakdowns of what each borrowing country owes to official and private creditors in each creditor country and the expected month-by-month debt-service payments owed to them through 2021.
The World Bank said that before the onset of the COVID-19 pandemic, rising public debt levels were already a cause for concern, particularly in many of the world’s poorest countries as discussed in its Four Waves of Debt report published in December 2019.
“Responding to a call from the World Bank and the International Monetary Fund, the G20 endorsed the DSSI in April 2020 to help up to 73 of the poorest countries manage the impact of the COVID-19 pandemic. The debt stock of DSSI-eligible countries to official bilateral creditors, composed by mostly G-20 countries, reached 178 billion dollars in 2019 and accounted for 17% of long-term net debt flows to low and middle-income countries. Within the G-20 creditor group, there have been some important shifts characterized by a marked increase in lending by G-20 member countries that are themselves middle-income countries,” it added.
Citing China as an example, though by far the largest creditor, it had seen its share of the combined debt owed to G-20 countries rise from 45% in 2013 to 63% at the end of 2019.
It said that over the same period, the share for Japan, the second-largest G-20 creditor, had remained broadly the same at 15%.
My COVID- 19 illness, a blessing from God – Trump
US President, Donald Trump has described his COVID-19 crisis as a blessing from God.
The US President, Mr. Donald Trump on resumption to his Oval Office recently, described his COVID-19 illness as a blessing from God.
His personal doctor, Sean Conley, has said that the president had no COVID-19 symptoms for more than 24 hours and has been fever-free for more than four days.
In a video message to all Americans, Mr. Trump said all Americans should have access to the treatments he was given. He also promised to provide the drugs produced by Regeneron Pharmaceuticals free of charge.
He went further to say that the experimental antibody cocktail he was given was a cure rather than a therapeutic measure, adding that hundreds of thousands of doses were nearly ready, but sadly the Regeneron’s drugs have not been approved by federal regulators.
(READ MORE: President Trump leaves Walter Reed Hospital)
According to Mr. Trump, “This was a blessing in disguise – I caught it, I heard about this drug, I said let me take it and it was incredible.”
President Trump renewed his attacks on China, telling Americans, “You’re not going to pay for it. It wasn’t your fault that this happened. It was China’s fault. And China is going to pay a big price. This was China’s fault.”
Many of his political supporters have described Mr. Trump as having shown good and exemplary leadership since his release from the hospital. But his opponents say his behavior has become increasingly erratic.
The White House rolled out new safety measures after President Trump returned from the hospital and the news that another aide had COVID-19.