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Oil Prices tumble to a 4 month low as U.S-China trade tension heightens

Several oil-rich nations (Nigeria inclusive) may face looming financial crises as Oil price declined to a 4-month low of $61.99 p/b on Friday, May 31, 2019. This low price was last recorded in February this year.

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Several oil-rich nations (Nigeria inclusive) may face looming financial crises as Oil price declined to a 4-month low of $61.99 p/b on Friday, May 31, 2019. This low price was last recorded in February this year.

Global oil prices which have been on a decline in recent days, finally reached a 4-month low of $61.99 p/b as President Trump’s trade policy and the slowdown in the Chinese economy cast doubt on the outlook for global demand.

Understanding the Situation: Despite lower supplies which should have encouraged price hike, crude prices fell from about $75 per barrel in April to less than $63 per barrel on Friday. As noted above, this was partly caused by U.S President Donald Trump’s rampaging trade wars.

Apparently, news about poor economic data from China and yet another trade tariff from the USA negatively impacted both the equity and commodity markets; specifically oil prices.

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The Chinese data showed that the country’s manufacturing activity shrank more than expected, making investors wonder how much Chinese growth is slowing and how the U.S.-China trade war will weigh on economic growth in China and the rest of the world.

Meanwhile, President Trump disclosed last week that the U.S. will be imposing a 5-percent tariff on all goods imported from Mexico starting June 10, to make Mexico resolve the “illegal migration crisis”.

Why this Matters: Countries such as Nigeria that depend largely on oil proceeds may find themselves in serious financial strains if oil prices continue to decline. For Nigeria, this is particularly not a good time for oil prices to decline, seeing as the country’s 2019 budget was recently signed by the President, even as a lot of money will be needed to implement it.

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Any further decline in oil prices will automatically result in a reduction in the revenue allocated to states. This will, in turn, pose economic difficulties across the country; especially so for states with little or non-existent internally generated revenue.

In the meantime, chances are that oil prices could rebound if the tension between the US and China eases up in the coming days.

 

Samuel is an Analyst with over 5 years experience. Connect with him via his twitter handle

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US government to ban WeChat and TikTok from app stores

Chinese-owned social media apps are facing a ban in the US over national security concerns.

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US government to ban WeChat and TikTok from app stores, Reasons why a record number of people are giving up their US citizenship, US approves chloroquine as treatment for coronavirus COVID-19, Nigeria U.S. Donald Trump-oil prices

The United States government says it will ban the services of Chinese tech giants, WeChat and TikTok, from online mobile application stores in the U.S. It also plans to prohibit any funds transfer/payment services through the WeChat mobile application.

This was announced by the U.S Commerce Secretary, Wilbur Ross, in a statement on Friday, following President Donald Trump’s Executive Orders (E.O.) 13942 and E.O. 13943, on the 6th of August.

“In response to President Trump’s Executive Orders signed August 6, 2020, the Department of Commerce (Commerce) today announced prohibitions on transactions relating to mobile applications (apps) WeChat and TikTok to safeguard the national security of the United States,” said Wilbur Ross.

He added that the Chinese Communist Party (CCP), has proven it has the means and the motive to use Chinese tech apps, to threaten America’s national security foreign policy, and the economy of the U.S.

He said the following transactions will be prohibited from September 20th for WeChat and November 12th for TikTok

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  • Any provision of service to distribute or maintain the WeChat or TikTok mobile applications, constituent code, or application updates, through an online mobile application store in the U.S.
  • Any provision of services through the WeChat mobile application, for the purpose of transferring funds or processing payments within the U.S.

Mr. Ross said that with the Executive Order, the US government has taken a ‘significant action’ in fighting China’s malicious personal data breach on American citizens, and also promote democratic rule-based norms, and aggressive enforcement of U.S. laws and regulations.

The U.S government announced that further prohibitive measures, relating to both companies may be announced in the future.

“Should the U.S. Government determine that WeChat’s or TikTok’s illicit behavior is being replicated by another app somehow outside the scope of these executive orders, the President has the authority to consider whether additional orders may be appropriate to address such activities.”

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President Trump has given until November 12, to resolve the TikTok security concerns of the US. He added that the prohibitions may be lifted, if they are addressed.

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WTO: Okonjo-Iweala still in contention as 3 candidates depart race for DG

Okonjo-Iweala and the remaining 4 other candidates hope to succeed the current DG, Mr Roberto Azevêdo.

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Ngozi Okonjo Iweala, World Bank, Davos, World Economic Forum, WTO accepts nomination of Okonjo-Iweala as DG despite opposition from Egypt

Three candidates running for the post of the Director-General of the World Trade Organisation have fallen out of the race after failing to secure enough votes in the first rounds of voting, leaving only 5 candidates left, including Nigeria’s Ngozi Okonjo-Iweala.

This was disclosed by Bloomberg on Thursday, before the meeting on Friday. The Candidates that are out of the race are Jesus Seade (Mexico), Tudor Ulianovschi (Moldova), and Hamid Mamdouh (Egypt). The candidates were not able to secure the support needed for the first round of 3 rounds of voting.

READ: China’s Covid-19 vaccine may be ready for general public in November 2020

Dr. Ngozi Okonjo Iweal joins 4 other candidates for the next round of voting. The candidates are; Liam Fox (UK), Amina Chawahir Mohamed Jibril (Kenya), Yoo Myung-hee ( South Korea), and Mohammad Maziad Al-Tuwaijri ( Saudi Arabia).

Ngozi Okonjo-Iweala disclosed last month some of her plans for the Organization if made President. Nairametrics reported she noted that part of her vision is to build a trade institution where there is greater trust among its members. She also stressed that the WTO, at this critical time, is needed to ensure that trade and global markets remain open.

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READ: Soybean Futures reach 2-year high, following U.S sales to China 

On healing the rift between the US and China, Okonjo-Iweala admitted that it is going to be challenging and not be easy. She said:

Well, this is not going to be easy, if it was easy, it could have been done a long time since. So it would be very challenging but it is not an impossible job. It is very clear that both the US and China have been helped and benefitted from the multilateral trading system in the past. Hundreds of millions have been lifted out of poverty. They have experienced shared prosperity in the economies and their countries.’

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She added she would listen to both countries to find out what really are the issues causing distrust among them. She said that she will not want to be involved in the larger political problems, but will rather separate the trade issues and focus on them and build this trust.

READ: Amaechi pleads with NASS to halt questioning of loan agreement with China

You need to begin to find areas where there can be confidence-building and trade. Building trust is not talking about it, you have to have areas where both can work together and agree and we have a golden opportunity in the fisheries subsidies negotiations that are going on now because the US is a party to it, China is a party, the EU, all other members,’’ she said.

Okonjo-Iweala and the 4 other candidates will present themselves to the members of the global trade body for the later stages of voting in the hopes of securing the highest number of votes to succeed the current DG, Mr. Roberto Azevêdo.

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WTO: Selection of new DG might be tied to the upcoming US presidential election

The eventual winner could be dependent on the outcome of the November 3 US Presidential elections.

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Global fight against covid-19 at risk over export restrictions - WTO
There has been a growing interest in the heavily lobbied Director-General, World Trade Organization role, following the stepping down of Roberto Azevedo on August 31. For the first time ever, two African women – Nigeria’s Ngozi Okonjo Iweala and Kenya’s Amina Mohammed, have a real chance at emerging as the first female leader of the embattled multilateral organization, in its 25 years history.
However, beyond their impressive resumes as a criterion for appointment, the eventual winner of the top job is expected to be dependent on the outcome of the November 3 US Presidential elections, keenly contested by Republican incumbent Donald Trump, and Democratic nominee Joe Biden.

The WTO’s effort to select a new leader entered a new stage this week, as the ambassadors from 164-member countries met for private consultations, on who they would support.

Six former WTO officials and trade experts revealed that the politicking in Geneva, Switzerland – WTO headquarters, could be a wild goose chase, as the decisive developments that will shape the future of the embattled global trade organization, are unfolding miles away in Washington, ahead of the November 3 presidential elections.

Although, the support of a particular candidate by the United States is critical; 4 trade experts, including former WTO employees, believe that the Trump administration is unlikely to breathe life into a multilateral body that he once threatened to leave. Donald Trump launched a trade war with China, repeatedly imposed tariffs on US allies, and destroyed WTO’s ability to intervene in disputes, by blocking the appointment of members to its Appellate Body.

David Tinline, a former adviser to Azevedo said, “I find it hard to imagine that the Trump administration would shift tack and do something very positive for the system.’

READ: Women entrepreneurs in Africa get $251 million support from G7 leaders

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The US Trade Representative (USTR), Robert Lighthizer, had in June told US lawmakers that, “the WTO needed a reform-driven leader and that he would veto any candidate who showed any whiff of anti-Americanism.”

The former WTO officials and trade experts said that the US-China economic conflict is a further divisive factor, as both countries will likely reject any candidate backed by the other.

The 8 candidates in contention for the top job, are expected to be trimmed down to 5 after the first confessional meetings on September 16. This will be further cut down to 2, and the final decision designed to be taken by convention before the November 7 deadline – just four days after the US elections.

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READ: Where next for oil prices?

Aside from the two influential African women vying for the role, Liam Fox, Britain’s former Trade Secretary, is a force to reckon with. If a favorite candidate does not emerge, some WTO members might prefer to wait until after the US election in case Joe Biden wins the US presidential election; especially, as Voting, seen as a last resort, has never occurred in WTO’s history.

A former member of WTO, Peter Van Den Bossche said, “They could play a waiting game, but that would push the decision until at least February or March 2021.”

Even though WTO is member-led, a strong leader who can facilitate decision making, and galvanize its 164 member nations, is crucial to reviving a severely embattled global organization.

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