Oil
Brent slips more than $2 after breakthrough Iran deal
SINGAPORE – Brent crude dropped more than $2 a barrel on Monday as supply fears eased following a breakthrough nuclear deal between world powers and Iran over the weekend.
Tough sanctions against Iran in the past two years have slashed exports from the OPEC member by more than half and cost Tehran billions of dollars in revenue losses a month, keeping Brent above $100 a barrel despite weak global demand.
The deal, which halts Iran’s most sensitive nuclear activity, also suspends sanctions by the United States and the European Union on several other sectors of Iran’s economy for an initial six-month period.
“What really concerns the market is what will happen after the six-month period, when more Iranian crude could flood the markets,” said Chee Tat Tan, investment analyst at Phillip Futures in Singapore
Brent fell the most in more than three weeks to as low as $108.31 a barrel, and was trading down $2.51 at $108.54 by 0530 GMT. U.S. oil slipped to as low as $93.64, and was down $1.14 cents at $93.70.
“When the U.S. market opens, we expect a further fall in Brent and to a lesser extend in WTI,” Tan said, predicting Brent prices may drop to around $107 this week.
Others said a further drop in oil is unlikely until more details emerge on the agreement, with major factors influencing the market such as worries over when the United States will curb its monetary stimulus and outages in Libya.
“Prices are reacting to the historic deal because it takes some of the risk premium out,” said Ben le Brun, a market analyst at OptionsXpress in Sydney. “But this news is hot off the press, and so there is some knee-jerk reaction. Oil may not fall much from here and we may see some paring back of losses.”
The relief, which the U.S. State Department said is “limited, temporary, targeted and reversible”, would allow about $4.2 billion of revenue from oil sales to be transferred in instalments from accounts frozen in the West if Iran fulfils its commitment.
“I think the United States has been very liberal in the negotiations, and it shouldn’t be a problem for Iran to meet the terms,” said Tan of Phillip Futures.
Apart from the revenue loss from reduced oil exports, Iran has billions of dollars stuck in banks in countries which buy its oil because the sanctions have cut off transfer facilities.
The White House estimates that Iran has lost more than $80 billion since the beginning of 2012 because of lost oil sales. It also estimates Tehran’s earnings over the next six months will be $30 billion down compared with a six-month period of 2011, before sanctions were imposed.
OUTLOOK
But sanctions that prevent energy companies from investing in Iran, and have slashed its oil exports to around 1 million barrels per day (bpd) from 2.5 million bpd, remain in place.
“The market will probably want to see the nitty-gritty details of the agreement before we see any further significant declines in prices,” Le Brun said.
Further declines were also stemmed by reduced oil shipments from Libya. Exports have been running at a fraction of the levels seen earlier this year of more than 1 million bpd and the government is struggling to cope with protesters who have taken over eastern oil ports and a western terminal in pursuit of political demands for more rights.
Investors will also look at a raft of housing reports from the United States to gauge the country’s economic outlook. The Fed’s last policy meeting suggest officials are preparing to reduce the pace of bond-buying in coming months as long as the economy continues to improve.
The Fed’s massive asset-purchase programme has been a key driver of investment in global commodities.
– REUTERS
In a strategic move to revitalize Nigeria’s oil and gas sector, the Federal Government has unveiled two key fiscal incentives aimed at attracting investment and enhancing energy security.
The announcement was made by Mr. Wale Edun, the Minister of Finance and Coordinating Minister of the Economy on Wednesday.
The first initiative, the Value Added Tax (VAT) Modification Order 2024, introduces critical exemptions for essential energy products and infrastructure, including Diesel, Feed Gas, Liquefied Petroleum Gas (LPG), Compressed Natural Gas (CNG), Electric Vehicles, Liquefied Natural Gas (LNG) infrastructure, and Clean Cooking Equipment.
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These exemptions are designed to reduce living costs for Nigerians, promote energy security, and accelerate the transition to cleaner energy alternatives.
The second initiative, the Notice of Tax Incentives for Deep Offshore Oil & Gas Production, offers new tax relief options for deep offshore exploration projects.
This measure aims to position Nigeria’s deep offshore basin as a premier destination for international oil and gas investments, boosting the country’s appeal to foreign investors.
These reforms are part of a broader set of policy initiatives, known as Policy Directives 40-42, endorsed by President Bola Ahmed Tinubu.
The directives reflect the administration’s commitment to fostering sustainable development in the energy sector and enhancing Nigeria’s competitive edge in the global oil and gas market.
By Yemie Adeoye
NIGERIA’s President Bola Tinubu has announced that the protracted ExxonMobil-Seplat upstream oil divestment will be formally approved by the Minister of petroleum within a matter of days, just as he announced his government’s intention to expand the Compress natural Gas, CNG buses initiative.
The President who stated this during his Independence day nationwide broadcast stated that the move is in line with his administration’s commitment to free enterprise, free entry and free exit in investments which is the hallmark of his administration investment policy.
“Fellow compatriots, our administration is committed to free enterprise, free entry, and free exit in investments while maintaining the sanctity and efficacy of our regulatory processes. This principle guides the divestment transactions in our upstream petroleum sector, where we are committed to changing the fortune positively. As such, the ExxonMobil Seplat divestment will receive ministerial approval in a matter of days, having been concluded by the regulator, NUPRC, in line with the Petroleum Industry Act, PIA. This was done in the same manner as other qualified divestments approved in the sector.”
The President also seized the opportunity to plead with Nigerians to be patient with his administration’s reform policies. “As your President, I assure you that we are committed to finding sustainable solutions to alleviate the suffering of our citizens. Once again, I plead for your patience as the reforms we are implementing show positive signs, and we are beginning to see light at the end of the tunnel”.
“Our energy transition programme is on course. We are expanding the adoption of the Presidential Initiative on Compressed Natural Gas for mass transit with private sector players. The Federal Government is ready to assist the thirty-six States and FCT in acquiring CNG buses for cheaper public transportation.
Fellow Nigerians, while we are working to stabilise the economy and secure the country, we also seek to foster national unity and build social harmony and cohesion. Our economy can only thrive when there is peace”. he enthused.
As part of the administration’s push to improve Ease of Doing Business (EoDB), Nigeria’s Vice President Kashim Shettima has expressed support for ExxonMobil’s plan to invest $10 billion in the country’s deep-water oil sector.
Speaking on Wednesday, September 25, 2024, during a meeting with ExxonMobil executives at the 79th United Nations General Assembly (UNGA) in New York, Shettima called the investment “a clear testament to the administration’s economic reforms and investor-friendly policies.”
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This announcement follows news that international maritime company DP World intends to develop a multibillion-dollar port project in Nigeria.
Stanley Nkwocha, Senior Special Assistant to the President on Media and Communications, shared the development in a statement on Wednesday. He quoted Shettima as saying: “ExxonMobil’s potential investment aligns with the vision of President Bola Ahmed Tinubu’s administration for a more investment-friendly Nigeria.
We are committed to fostering an environment that supports such transformative projects.”Shettima also discussed the administration’s broader efforts to improve the ease of doing business, highlighting the “Renewed Hope Agenda,” which aims to simplify bureaucratic processes, enhance transparency, and offer fiscal incentives to attract global investors.
“Our administration has taken bold steps to unify the exchange rate, remove fuel subsidies, and implement tax reforms. These measures, though challenging in the short term, are intended to create a stable and predictable business environment in the long term,” he added.
On the oil and gas sector, Shettima mentioned that the government is revising the fiscal framework for deep-water operations to attract investment while ensuring fair returns for the Nigerian people.
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