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OPEC+ to discuss extension of output cut as Chinese demands boost Nigerian oil

Note that OPEC members usually take a decision on their plans for oil trade for the month of July in the first week of June, so as to give them time to react quickly to decisions at the meeting.

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OPEC+ to discuss extension of output cut as China gives Nigerian oil a huge boost

There are indications that OPEC+ is close to a decision to bring forward its next meeting to June 4, as against the earlier date of June 9-10, in order to discuss an extension of its current output cut beyond the June period.

This was earlier proposed by OPEC’s President, who is also the Algerian Energy Minister, Mohamed Arkab. The change of date is to give the oil cartel more flexibility to change its current production limits.

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Note that OPEC members usually take a decision on their plans for oil trade for the month of July in the first week of June, so as to give them time to react quickly to decisions at the meeting.

OPEC+ is considering extending the current output cuts for one to three months, as a short term measure, in order not to disrupt the rebalancing of the market. This is just as it was reported that Russia wants to start easing the output cut from July.

The current output cut for the cartel is 9.7 million barrels for May and June. This was initially meant to be eased to about 7.7 million barrels a day in July.

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(READ MORE: OPEC+ deal gets boost as Russia, Saudi Arabia consider further output cut)

In the meantime, reports have suggested that Russia has no objection to bringing forward the next meeting of OPEC and its allies to June 4. The lack of opposition from Russia to an earlier date suggests that it might be moving closer to an agreement with Saudi Arabia on how to extend the output cuts.

Saudi, Russia agree to cut oil by 20 million barrel, Further oil production cut required to keep oil price above $40 in 2020 , OPEC + deal to boost Nigeria’s earnings by $2.8 Billion, OPEC+ to discuss extension of output cut as China gives Nigerian oil a huge boost

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It must be noted that oil prices have rallied, as the output cuts coincided with a stronger than expected rebound in demand following the easing of global COVID-19 lockdowns. However, there are fears that the easing of lockdown could trigger a second wave of the pandemic which would negatively affect demand.

There might be some stumbling blocks to the agreement on output cut extension, as member countries like Nigeria and the state oil company of Abu Dhabi have already announced plans to increase exports in July, in line with the OPEC+ deal in April. Nigeria was also one of the OPEC countries that failed to comply with the output cut allocated to it in the month of May. In fact, Nigeria only implemented 19% of its output cut.

Meanwhile, Nigeria’s export prospects got a boost with the return of China, following the re-opening of the Chinese economy. Nigerian crude had struggled to get to its traditional market in Asia, just as intense price pressure had rendered its sweet crude unattractive.

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(READ MORE: Oil market still uncertain over OPEC+ deal)

The Chinese buyers who would normally buy only 1-2 cargoes from Nigeria, had 4 vessels sailing off to the Asian country in the month of April. The trade figure for May is even much better, because as much as 7 cargoes were also shipped to China, comprising of about 9 million barrels. This is expected to be even higher in June.

The surge in exports to China was however aided by an unprecedented drop in grade differentials, as most flagship Nigerian grades are sold at discounts against the real market prices.

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Patricia

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- [email protected]

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Real Estate and Construction

Nigerian Real Estate and COVID in 19 Slides

Validate investment cases and focus energies on property sectors that are more resistant to shocks.

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Nigeria is rapidly approaching an economic crisis as the COVID-19 global pandemic has put the world on lockdown and sent Brent crude oil prices to a 20-year low. Spurred by lower global demand and reliance on oil exports for 90% of its foreign exchange income, Nigeria’s economy and her fragile currency are being pushed to their breaking point.

In this report, we will focus on the impact this pandemic will have on the real estate market in Nigeria. So far, key themes include mass concessions, re-negotiation and restructuring activity, slowed decision making, stretched out project deliveries due to the lockdown and more. After outlining the potential property sector losers, hospitality and retail most especially, alongside potential winners (industrial and healthcare), we discuss the impact of the COVID-19 pandemic on individual property sectors and the direction of rentals, capital markets and more.

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Within this uncertain environment, we recommend that market participants including asset owners, real estate service providers and others stress test their businesses at varying levels of reduced income, use the downtime for market research to validate investment cases and focus energies on property sectors that are more resistant to shocks.

Download the report through the link in the header.

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Appointments

IMF appoints Ceda Ogada as new director and secretary of the fund 

Before joining the IMF, Ogada worked at the United Nations Conference on Trade and Development.

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The International Monetary fund (IMF) has announced the appointment of Mr. Ceda Ogada as the Secretary of the Fund and Director of the Secretary’s Department with effect from September 1, 2020, following the retirement of the former Secretary, Mr Jianhai Lin. 

This was disclosed in a press statement by IMF on Wednesday, July 15, 2020. 

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While making the announcement, Ms. Kristalina Georgieva, Managing Director of the International Monetary Fund (IMF), said, Ceda has outstanding institutional knowledge, strategic and intellectual heft, and people leadership. His unparalleled ability to bring people together, combined with his profound appreciation of the Fund’s institutional history and legal principles, as well as a strong service orientation, will help the Fund to even more effectively serve our member countries in a very challenging economic environment.” 

Mr. Ogada joined the IMF’s Legal Department in 1999 and rose through the ranks to become Deputy General Counsel in 2014. During this time, he has worked on virtually all aspects of the Fund’s work, including advising on the governance of the Fund, on country operations, helping to develop Fund policies and implementation guidance, and providing technical assistance to member countries.  

According to the statement, ‘’Some of the key projects that he has worked on include the Fund’s enhanced policy to address governance and corruption issues, ensuring the adequacy of the Fund’s lending resources, reforms in lending policy such as the establishment of the Flexible Credit Line (FCL) and the Catastrophe Containment and Relief Trust (CCRT), reviews on surveillance policy and capacity development strategy and transparency, archives and communications policies.’ 

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The new Secretary of the fund was heavily involved in the work on euro area crisis countries during the global financial crisis. Recently, he has led the Legal Department in promoting good governance and transparency in several countries, together with the use of emergency financing for the COVID-19 crisis. 

Before he joined IMF, Mr. Ogada worked at the United Nations Conference on Trade and Development as a legal expert and also before that he was in private legal practice in the United States. He holds a Juris Doctor from Harvard Law School and a B.A. in history from Dartmouth College. Mr. Ogada is a citizen of Kenya. 

 

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Economy & Politics

Just in: Suspended EFCC boss, Ibrahim Magu, finally released from detention

Magu’s lawyer confirmed his release from the custody of the DSS.

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EFCC to help AMCON recover bad debts

The suspended acting Chairman of the Economic and Financial Crime Commission (EFCC) has been released from police custody after about 10 days in detention.

According to a monitored report, this was confirmed by his lawyer, Tosin Ojaomo, who said that the EFCC boss is no longer under custody.

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The suspended EFCC boss was invited by the presidential probe panel headed by Ayo Salami, a retired President of the Appeal Court to the Presidential Villa in Abuja on July 6 over allegations bordering on corruption and financial misconduct.

He was later moved to Area 10 Force Criminal Investigation Department (FCID) of the police in Abuja where he has since been detained.

Just earlier today, the Inspector-General of Police, Mohammed Adamu, asked Magu, to direct his bail application to the presidential probe panel.

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This was in response to a request by Mr Oluwatosin Ojaomo, Magu’s legal representative, who asked the IGP to grant bail to his client on self-recognisance after the suspended EFCC chief had spent four days in custody.

But in a letter dated July 14, 2020, and addressed to Mr Ojaomo, the IGP said the police force is not investigating and detaining Magu, so, it cannot grant the bail request.

It also advised the lawyer to redirect his request to the chairman of the presidential probe panel for appropriate action.

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