Some oil markets are beginning to react to the unprecedented deal agreed by the Organization of Petroleum Exporting Countries (OPEC) and its allies, together with other major oil producers.
They have expressed doubts as to whether these cuts will be enough to make up for the low demand for crude, which the Coronavirus pandemic has caused.
With the agreement of OPEC+ and other oil producers on a crude oil output cut of 9.7 million barrels per day, analysts have stated that it might not be enough to help stabilize the oil market.
According to them, an output cut of at least 20 million barrels of crude oil per day will be needed to actually have an impact in the market which has seriously been affected by COVID-19.
Meanwhile, some of the stakeholders, including Saudi Arabia, have shown interest in another cut. That means there are indications that such would be considered when the OPEC and its allies meet again in June to further stabilize the market.
According to Bloomberg, cuts by OPEX+ will start in May, removing almost a 10th of global output. Saudi Energy Minister Prince Abdulaziz bin Salman explained on Monday that the kingdom is ready to trim production even further if needed, but will only cut if others in the alliance curb their supply accordingly.
Impact on oil prices
According to a monitored report from Bloomberg, the Asian market is experiencing an increase in crude oil prices with support from the commitment of the biggest producers. While West Texas rose by 41 cents to close at $22.41 on Monday, the Brent crude also increased when it rose to $31.74 per barrel from $31.40.
The oil market had witnessed an unprecedented crash in crude oil prices globally primarily due to the outbreak of the coronavirus pandemic and the trade war between Russia and Saudi Arabia.
There are concerns that the OPEC+ deal might not be enough, especially when the market has demand losses that might be up to 35 million barrels a day.
Goldman Sachs had said in a note that the output cut by OPEC+ would lead to actual production cut of 4.3 million barrels per day from first quarter.
Nigeria needs urgent economic diversification – AfDB
The AfDB said that the diversification of the Nigerian economy had become important for it to respond favourably to the emerging challenges of the 21st century.
The African Development Bank has stated that Nigeria, Africa’s largest economy, needs urgent economic diversification to move the country from a single income source (oil and minerals) towards multiple income sources.
This was disclosed by Prof. Oyelaran-Oyeyinka Oyebanji, Senior Special Adviser on Industrialisation at African Development Bank (AfDB), at the 22nd Founder’s Day Lecture of the Igbinedion University, the first private university in Edo state, on Monday.
What the AfDB said about diversification
“In pursuit of long-term recovery and sustainable development, Nigeria needs urgent economic diversification. Nothing is more poignantly demonstrative of the danger of over-reliance on a single or narrow range of commodities than the recent crash in oil price we saw in 2020 due to the COVID-19.
Economic diversification entails a shift away from a single income source (oil and minerals) toward multiple income sources from an increasing spectrum of sectors, products and markets,” he said.
In case you missed it
The International Monetary Fund (IMF) stated earlier this year that economic diversification was important to Nigeria and critical for her economic recovery.
They said the limited gains from inward-oriented policies in terms of creating jobs and improving living standards suggested that Nigeria needed to have a change of strategy. It was pointed out that in order to accommodate a growing number of young people entering the labour market, Nigeria would need to create at least 5 million new jobs each year over the next decade.
Ghana-Nigerian traders dispute: FG to send delegation to Ghana
The delegation will be led by the Minister of Trade, Niyi Adebayo, and comprised of other private stakeholders.
The Nigerian Government will send a delegation led by the Minister of Trade, Niyi Adebayo, to Ghana to end the crisis between Nigerian traders in Ghana and local authorities—an issue that started last year before the Ghanaian Presidential elections.
The delegation was ordered by the Presidency as disclosed in a statement by the trade ministry on Monday evening.
The statement revealed that the delegation would be comprised of private stakeholders also who would be sent to dialogue with Ghanaian trade authorities to find a solution to the crisis.
The meeting between both parties will be held between May 31 and June 1, 2021.
What you should know
Recall Nairametrics reported last year that Ghana’s Foreign Minister, Shirley Ayorkor Botchwey, said that Nigeria’s border closure in 2019 hurt Ghanaians and nearly bankrupted many Ghanaian export businesses after their goods were stuck at the Seme Border for months, reacting to the shutdown of Nigerian-owned shops by Ghanaian authorities last year.
Nairametrics | Company Earnings
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- Ardova Plc confirms appointment of Oladeinde Nelson-Cole as secretary.