The 14th Meeting of OPEC and non-OPEC Ministers took place via video conference on Thursday 4th of March, 2021, under the Chairmanship of HRH Prince Abdul Aziz bin Salman, Saudi Arabia’s Minister of Energy, and Co-Chair His Excellency Alexander Novak, Deputy Prime Minister of the Russian Federation.
In theory, OPEC+ is an organization but in practice, the Group operates like a “cartel” as Ex-US President, Donald Trump describes it. His Royal Highness Abdul Aziz Bin Salman is the well-articulated Head Honcho. The manner in which he has high-handedly managed the oil markets was evident in his responses at the latest meeting.
Here are a few takeaways from the meeting.
OPEC+ getting back control of the Oil markets
In one of his addresses, Saudi Arabia’s energy minister Prince Abdulaziz said that the OPEC Plus cut combined with his country’s voluntary cut managed to accelerate the recovery process of the market.
Evidently, the market has been in an uptrend since the negative prices experienced early last year. Although the markets have experienced a few hurdles externally (geopolitics) and internally (quota cheats and disagreements), prices have rebounded to the highest since 2019. What makes this more remarkable is there is still a pandemic and jet fuel has yet to rebound as aviation has not recovered.
OPEC+ riding the wave of the financial markets
With the bond market on the edge on the signs of inflation, it appears investors are hedging inflation with commodities. That is why all commodities appear to be on the upside. Commodities tend to shine during periods of inflation. With gold prices melting, it appears funds are exposing their portfolio to oil. Hence, why some analysts have argued current prices are not a reflection of supply and demand. They believe the recent oil price rally might have been caused more by financial players rather than improvements in physical oil market fundamentals.
Caution and Vigilance needed to balance the markets
During one of OPEC’s chair remarks, Prince Salman reiterated how important compliance has been in the recovery process. He also commended HE Timipye Sylva’s in his diplomatic management as he compensated on previous failed quotas and his mission as Special Envoy to Congo, Equatorial Guinea, Gabon and South Sudan in complying with their quotas. In his words to the Minister of State for Petroleum Resources, “you have earned your graduation”.
Prince Salman also reiterated how important caution and vigilance are needed in these markets. He said, “we have learned in the course of the past year, the difficulty of making hard predictions in such an unpredictable environment.”
He further added that, “We Have mitigated the impact of the last three waves of pandemic by avoiding complacency. To buttress his speech, he said ‘we did not cast caution to the winds, nor endanger our achievements over the past year. We have elected to follow a careful and proactive approach that has proved successful.”
OPEC+ unity getting stronger
In every successful relationship, understanding and unity are very key tenets needed. Although Russia has a separate agenda of theirs, with regards to the U.S shale, market share and their domestic needs, they still understand that the ultimate priority is to keep the group united. This was reiterated by Alexander Novak, the Russian Minister agreed that the market hasn’t fully recovered but it’s in a better state than it was a few months ago. He also stressed the importance of conformity to the pact.
The fact that the group even had a majority consensus on the decision not to rollover cuts for April shows that there is a lot of unity in the group. Nigeria also supported the views that there should not be additional supply.
On U.S Shale and Joe Biden
“Drill, baby, drill is gone forever.” These were the words of the Saudi Energy Minister Prince Abdulaziz bin Salman, who in all indications is boasting that the U.S shale revolution has ended. It appears U.S shale is kneecapped as most shale companies suffered financial bankruptcies during the last oil crash. Also with little Capital expenditure and demand for American oil, OPEC has regained dominance in the markets. Personally, I noted this when the markets still went up after an EIA report on a 20 million barrel build in U.S crude inventories which is very unusual.
On the other hand, Saudi Arabia is going to have some sort of love-hate relationship with Joe Biden. With talks of a sanction on Saudi Arabia over the death of Jamal Khashoggi and other human rights which has forced the U.S to ‘recalibrate’ their issues with the Middle-East nation. However, Prince Salman must love having an American President who is so focused on climate change, energy transition and renewable energy which inadvertently means the rise of OPEC+ and oil prices will have a smooth sailing.
India and China will have to use their stockpiles
When asked about India, The OPEC chair, Prince Salman said that India should start pulling oil out of the cheap stocks they bought last year. Notably, when prices were down, a lot of oil-importing nations filled their inventories with cheap oil. Saudi Arabia’s Energy Minister is of the belief that India and the rest should exhaust what they have accumulated during the oil price crisis. This would be disappointing to India, as they wanted more supply (lower prices) to boost their economic recovery.
Oil traders and stakeholders did not see this coming. Every speculator short in the market will be “ouching like hell” as HRH Prince Salman warned last year. Kudos to Egypt for hedging against high prices as it seems that prices will keep rising in the foreseeable future. OPEC once again has shown admirable strategy in the global oil market management. Additionally, Saudi Arabia is extending its voluntary output cut by another 1m b/d, and the cartel isn’t increasing output for April.
You can find the full press statement from OPEC here
Lagos State seeks investors in aquatic and livestock agriculture value chain
The Commissioner revealed that the scheme was in line with the State’s five-year strategic agriculture roadmap.
The Lagos State Government announced it is seeking private sector collaboration for Agriculture sector value chain development in livestock feed mills, fisheries and red meat.
This was disclosed by the State Commissioner for Agriculture, Ms Abisola Olusanya, in a statement on Sunday in Lagos.
The Commissioner revealed that the scheme was in line with the State’s five-year strategic agriculture roadmap, as the State identified the 3 main sectors for value chain disruption.
She also added that investment in the sectors would also develop jobs for the industry and boost the State’s GDP growth, through Private Sector collaboration as Lagos residents consume over N5 trillion worth of food annually.
“The objective is to stimulate and encourage more public-private partnerships in the three value chains,” she said.
“When you consider this pool of transactions happening in Lagos, it shows that we are the market. For instance, we demand over 400,000 metric tons of fish on an annual basis.
“But our fishermen and our aquaculture farmers are only able to produce just about 174,000 metric tons with deficit of 200,000 metric tons,” she added.
She also disclosed that the state has 9,000 artisanal fishermen, and bringing more youths into the space will increase the level of fish and seafood being harnessed from our water bodies. Looking at the transactional value on an annual basis, the fisheries sector is worth well over N120billion according to her.
In case you missed it: Nigeria exported agricultural products worth N321.5 billion in 2020, representing a 19.16% increase when compared to N269.8 billion recorded in 2019 and a 6.27% increase compared to N302.28 billion recorded in 2018.
#DigitalSkillsTraining: FG announces conclusion of selection process
Only successful applicants that are contacted by the Ministry are to report at the training venue.
The Federal Government through the Ministry of Youth and Sports disclosed that the selection process for the upcoming Digital Skills Training has been concluded for the #DigitalSkillsTraining from April 11th to 30th, 2021.
This was disclosed in a statement by the Ministry of Youth and Sport on Sunday evening.
“The Federal Ministry of Youth and Sports Development wishes to inform the general public and all Nigerian Youths that the selection process has been concluded for successful applicants for the #DigitalSkillsTraining scheduled for April 11 to 30, 2021,” the statement said.
The Ministry added that only successful applicants that were contacted by the Ministry are to report at the training venue. Those who were not successful but arrive at the training would not be admitted.
“Upcoming #DigitalSkillsTraining Programmes of the Ministry will be widely publicized on youthandsport.gov.ng , on : noya.ng and on the Ministry’s social media handles,” the statement added.
What you should know
Recall that Nairametrics reported in November 2020, that the Ministry of Youths and Sports Development announced it will scale up its digital skills training to cover 500,000 youths across the country after securing funding under the COVID-19 stimulus budget.
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