Oil
Oil falls as euro zone concerns rise
CYPRUS – Brent crude dropped more than $1 to below $109 a barrel on Monday in its steepest fall in nearly three weeks as the dollar strengthened after an unusual bailout proposal for Cyprus threatened to trigger fresh turmoil in the euro zone. the euro zone
News that Cyprus would have to tax depositors as part of a bailout plan sparked fears of a run on some banks in the region, driving down the euro and other riskier assets such as Asian shares and base metals. A string of positive numbers from the world’s top oil consumer the US and ongoing supply disruption worries still helped stem further losses in oil.
Brent futures fell $1.28 a barrel to $108.54 a barrel early on Monday, sliding nearly 1.2%, the most in one session since 26 February.
US oil declined $1.22 at $92.23, slipping 1%, the most since 1 March.
“Investors are worried that the Cyprus tax plan will set precedence for other EU nations that require bailout,” said Victor Shum, senior partner at IHS Purvin & Gertz in Singapore. “But positive economic numbers out of the US and issues with Iran’s nuclear programme will support oil.”
Oil markets will remain volatile for the next few days as investors watch for any spillover of the developments in Cyprus to other EU nations, with the US benchmark supported at $90 a barrel and Brent at $105, Shum said.
In a radical departure from previous aid packages, euro zone finance ministers want Cyprus savers to forfeit a portion of their deposits in return for a €10 billion ($13 billion) bailout for the island, which has been financially crippled by its exposure to neighbouring Greece.
Cyprus’s fractious 56-member parliament is to vote on Monday on whether depositors should forfeit part of their savings to fund a bailout, mainly needed to recapitalize banks.
The uncertainty surrounding the proposed bailout drove investors to the safety of gold, which rose above $1,600 an ounce for the first time in more than two weeks. The dollar index rose 0.61% on Monday. A stronger greenback can weigh on dollar-denominated commodities such as oil.
“It’s a Cyprus shock. The euro fell, and crude followed that lower,” said Ken Hasegawa, a commodity sales manager at Newedge in Tokyo. “We don’t know what’s going to happen, and it’s becoming a uncertain factor.”
Signals are mixed for Brent as it is not clear that a rebound from the 13 March low has completed, while US oil may drop to $91 as it failed to break a resistance at $93.72 for the second time, Reuters technical analyst Wang Tao said.
Further losses were capped by expectations of a steady revival in demand growth from the United States.
US manufacturing output bounced back in February in the latest signal of strength in an economy that is showing clear momentum. Factory production increased 0.8% last month after falling 0.3% in January, the Federal Reserve said. The gain was broad based and double what economists had expected.
Lingering worries of an escalation in the continued standoff between the West and Iran over Tehran’s disputed nuclear programme will also help ensure prices don’t fall much further. Concerns of supply disruption from the Middle East have kept Brent above $100 a barrel through most of 2012 and this year.
As part of its latest effort to choke off Tehran’s funding of its nuclear programme, the US has imposed sanctions on Iranian companies it says provide insurance services to the country’s main petroleum shipper.
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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