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FG ready for OPEC talks, as brent crude risk plunging to single digit low

The Federal Government has expressed its readiness for talks with other Organization of Petroleum Exporting Country (OPEC) member states

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Petroleum Industry Bill to be passed by mid-2020, says Sylva, FG discovers crude oil in north, says there’s more , OPEC, non-OPEC countries to meet as Saudi, Russia price war affects Nigeria’s budget, FG considers fuel price reduction, OPEC deal: Nigeria to generate additional $2.8 billion revenue as FG reacts
The Federal Government has expressed its readiness for talks with other Organization of Petroleum Exporting Country (OPEC) member states and their allies referred to as OPEC+, to review the development in the oil market.
This was disclosed by the Minister of State for Petroleum Resources, Timipre Sylva, during a press statement on Monday, April 6, 2020.
The Minister in his statement on behalf of the Federal Government, assured the Nigerian and International communities, that the government is observing the developments in the oil and gas industry with keen interest and will take a position that will favor its economic forecast.
In his statement, the Minister said, “I will continue to monitor the impact of Covid-19 on our economy and the global economy. In our consultations with global industry stakeholders in the lead up to the OPEC+ meeting scheduled for Thursday, April 9, 2020, the Nigerian Government will take a position that is in the best interest for our short term and long-term forecast.
It is well known that Nigeria has always collaborated with key OPEC members such as Saudi Arabia in maintaining a balanced position that has helped to make OPEC one of the most successful global institutions in recent history. Nigeria intends to maintain this team spirit even as it takes into account, the position of OPEC strategic allies such as Russia,’’ Sylva said.
The minister pointed out that the driving force of Nigeria’s OPEC policy is the stability of the country’s economy as well as the global economy which is heavily dependent on OPEC and its allies.
One of the major reasons for the crash in crude oil prices globally is the lockdown and travel restrictions that are being carried out globally in order to contain the spread and impact of the coronavirus disease. The lockdown and restrictions has led to low demand.
This is compounded by the oil trade war between Russia and Saudi Arabia.
A report from Fitch suggests that the Brent Crude could plunge to a single digit low, if the major oil producer do not immediately reach a deal for output cut.
Some days ago, the crude oil prices rallied back on the news of a potential deal between Russia and Saudi Arabia on the trade dispute.
The OPEC and its allies are scheduled to meet on Thursday as against the earlier planned Monday date, in order to see if they could agree on production cuts.

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Chike Olisah is a graduate of accountancy with over 15 years working experience in the financial service sector. He has worked in research and marketing departments of three top commercial banks. Chike is a senior member of the Nairametrics Editorial Team. You may contact him via his email- chike.olisah@nairametrics.com.

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Central banks digital currencies pose a threat against the U.S dollar

In general, digital currencies could weaken the power of U.S. sanctions and the ability of the U.S. Treasury to watch illicit financial flows.

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Central banks digital currencies pose a threat against the U.S dollar.

A new report by America’s biggest bank, JP Morgan Chase, said the U.S dollar is being faced with a major threat as many  central banks’ digital currencies continue to gain traction.

Analysts, including Josh Younger, the head of U.S. interest-rate derivatives strategy and Michael Feroli, the chief U.S. economist, wrote in a report saying this:

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“There is no country with more to lose from the disruptive potential of digital currency than the United States.

This revolves primarily around U.S. dollar hegemony. Issuing the global reserve currency and the medium of exchange for international trade in commodities, goods, and services convey immense advantages.” 

Aditi Kumar and Eric Rosenbach also recently penned an opinion piece for Foreign Affairs in which they noted that “Just recently, America’s arch-rival China became the first major economy to carry a real test of a national digital currency.”

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(READ MORE: Why the strong dollar is giving Nigeria headache)

In general, electronic currencies could weaken the power of U.S. sanctions and the ability of the U.S. Treasury to watch illicit financial flows. A digital Chinese currency (yuan) combined with China’s developed electronic payment systems may give China more future influence than it ever bargained for.  

What Nigerians should know about Digital currencies

A digital currency is a cash balance recorded electronically on a store value card or other physical devices, which could someday replace the physical notes of the naira, for instance.

Digital currencies can be decentralized, that is where the control over the cash supply can come from diverse sources. Digital  currencies can also be centralized, where there is a midway point of control over cash supply, just like the way central banks work.

Central banks digital currencies pose a threat against the U.S dollar.

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Although JP Morgan does not see the U.S dollar being overthrown as the world’s reserve currency anytime soon, experts warned that the U.S dollar dominance could weaken. This is because its processing trade settlement and the SWIFT system could make it more vulnerable.

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The American bank continued by saying:

“Offering a cross-border payment solution built on top of a digital dollar would, particularly if designed to be minimally disruptive to the structure of the domestic financial system, be a very modest investment to protect a key means to project power in the global economy,

“For high-income countries and the U.S. in particular, digital currency is an exercise in geopolitical risk management.” 

Federal Reserve Chairman Jerome Powell said months ago that the Federal Reserve was taking a critical view on the issues regarding a digital currency.

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Dollar gains against major currencies

U.S dollar stood firm against major currencies on Monday as fears over rising tensions between America and China over Beijing’s plans to begin

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The US dollar remains king, U.S dollar gains against major currencies, America threatens China with sanctions.

The U.S dollar was up on Monday morning during London’s trading session after protests in Hong Kong yesterday escalated U.S-China tensions.

US dollar stood firm against major currencies on Monday as fears over rising tensions between America and China heightened.

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The American Dollar Index that monitors the U.S dollar against a basket of other major currencies was slightly up 0.02% to 99.945 by 11.10 am Nigerian local time.

What it means: Nigerians hoping to meet a foreign exchange payment obligation, transactions via the dollar to countries like Europe, Japan, would have the need to pay fewer dollars to fulfill such transactions.

(READ MORE:Reports: China may defer loans owed by Nigeria and others)

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Meanwhile, the friendship between the Americans and Chinese has soured lately since the outbreak of the COVID-19 pandemic. US President Trump and President Jinping of China have traded words against each other issues surrounding COVID-19, including accusations of lack of transparency and cover-ups. 

 

American Dollar remains king as stimulus fails to stop global financial market panic,Demand for “Inflow dollars” drive exchange rate to as high as $N420/$1 compared to “Cash dollars”, U.S dollar drops against major currencies, tension rises between America and China, U.S dollar gains against major currencies, America threatens China with sanctions.

Consequently, the U.S. Commerce Department added 33 Chinese businesses to a blacklist on Friday, and some U.S. Senators proposed sanctions on those businesses.

“The biggest concern is the tension between the United States and China, things were already bad, and it is likely to get worse because of the Hong Kong security law. This supports risk-off trades, which is positive for the dollar and the yen,” Tekuya Kanda, the general manager of research at Gaitame.com Research Institute, told Reuters.

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Air Peace to evacuate stranded Indians from Lagos to Kerala

A list of the passengers to be attended to has already been given and the flight shall depart Lagos on May 30, 2020, to Cochin Airport, Kerala.

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Air Peace signs deal with Brazillian aerospace company , Air Peace suspends flight operations over COVID-19

The management of Air Peace Nigeria has been contacted by the Indian High Commission in Nigeria to undertake the evacuation of stranded Indian nationals to Kerala, India. This was disclosed by the airline via its Twitter handle.

The airline explained that a list of passengers that would be attended to have been released and it has started reaching out to the Indians on Saturday.

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It stated, “A list of the passengers to be attended to has already been given to us and we have commenced reaching out to them. The flight shall depart Lagos on May 30, 2020, to Cochin Airport, Kerala.”

The flight is not free anyway. According to the airline, payments are expected immediately and they are Economy is $1.300 and Business class is tag $1,700. “You are equally allowed to pay in Naira at N460/$,” it added.

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However, some Indians in Nigeria has reacted with mixed feelings to the development on Twitter. While some were ready to join the flight back home, others called for the refund of ticket fare booked a week ago.

READ ALSO: Hope rises as Emefiele set to meet MTN, 4 banks today.

For instance, Jayant Khamesra requested for the refund ticket fare of N568, 100, which he paid for a flight from Lagos to Delhi.

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He said, “Please refund ticket fare P47812 LAGOS to DELHI. No show by Air Peace and it is been 1 week now, there has been no refund or confirmation of the same. Reference ALHN79 amount N568,100. I am sure a good world-class carrier like Air Peace won’t delay refunds purposely. Please act fast.

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