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Economy

US tackles OPEC over rising Oil prices

Joe Biden, US President

—-rallies allies to saturate global market with excess supply

 

Eyewitness reporter with agency report

Amidst controlled supplies of oil in the international market by the Organisation of Petroleum Exporting Countries(OPEC) and its allies( OPEC +), which has raised global oil prices, the United States of America (USA) has perfected a plan to crash the soaring oil prices.
To achieve this, the US has beckoned on its allies to join it in releasing their strategic oil reserves that will saturate the global oil market with excess supply and crash the galloping prices of crude.

The Joe Biden administration came to this conclusion as the last resort after its appeal to OPEC and its allies, OPEC+, to raise production quota to boost oil supplies failed.

Consequently, governments from some of the world’s biggest economies may have agreed with the US in principle when they said they were looking into releasing oil from their strategic reserves, after a rare US request for a coordinated move to cool global energy prices ahead of a meeting of major oil-producing nations.

The Biden administration has asked a wide range of countries, including China for the first time, to consider releasing stocks of crude.

Other major consumers India, Japan and South Korea were also involved in discussions.

As the world economy rebounds from the pandemic, Washington and other nations have been frustrated that producers in OPEC+, the Organization of the Petroleum Exporting Countries and allies such as Russia, have rebuffed US requests to speed up additional oil supplies.

OPEC nations, for their part, have said that world economies remain too fragile to warrant increasing supplies quickly.

To that end, the market slumped on Friday after Austria announced that it would reimpose a full nationwide lockdown due to soaring coronavirus cases, and Germany, Europe’s largest economy, may soon follow suit.

International benchmark Brent was down 2.7 percent to US$79.11 (RM330) a barrel, the lowest since early October.

 The market has been weakening for several weeks as investors have started to anticipate an increase in supply worldwide.

With gasoline prices and other costs rising, Democratic US President Joe Biden also faces political pressure ahead of midterm congressional elections next year.

 A Reuters poll in October showed 67 percent of US adults agreed that inflation is a very big concern.

Members of Biden’s national security team had discussed the need to meet fuel demand, White House spokesperson Jen Psaki said.

 “That is an ongoing conversation and one we are having with a number of partners,” she added.

OPEC+ plans to meet on December 2nd, 2021.

 The group has been raising output by 400,000 barrels per day (bpd) per month, gradually unwinding record production cuts made in 2020 when the pandemic dissipated fuel demand.

This week, Secretary-General Mohammad Barkindo said OPEC expects an oil supply surplus to begin building next month.

Other countries have been pressing OPEC for some time, including China and India.

“This is not a case of supplies not being available,” Hardeep Singh Puri, India’s Oil Minister, told a conference in Dubai on Wednesday.

 “There are five million barrels a day of supplies available which have not been released for whatever reason.”

While OPEC+ has been raising oil output by 400,000 bpd per month since July, the producer group still has about 3.8 million bpd in supply cuts that it has not yet returned to the market.

Several of the group’s members have been unable to meet production targets due to years of under-investment.

“Half of (OPEC+’s) members can’t meet their quotas given their own under-investment,” Goldman Sachs analysts said.

OPEC+ in April 2020 cut output by more than 10 million barrels a day in response to the swift spread of the coronavirus pandemic.

China’s state reserve bureau told Reuters it was working on a release of crude oil reserves, but declined to comment on the US request.

It would also mark the first time that China, the world’s No. 2 oil consumer and largest importer, would be involved in a coordinated release with the United States.

China held its first-ever public auction of oil reserves in September.

Consultancy Energy Aspects said in a note to clients that Beijing is expected to release another 10 million to 15 million barrels of crude from its reserves in eastern Zhoushan in its next auction round.

“Any oil released from the Chinese SPR needs to be refilled within 90 days,” Energy Aspects said.

“The market should focus on where these countries will find crude to refill these tanks given just how low stocks are.”

The United States has the largest strategic reserve at more than 600 million barrels.

The US SPR was set up in the 1970s after the Arab Oil Embargo to ensure the nation had adequate supply to weather an emergency.

In the last several years, the shale boom has pushed US output to rival that of Saudi Arabia and Russia.

That has enabled the United States to become less dependent on energy imports from other nations, particularly members of OPEC.

The United States and its allies have coordinated strategic petroleum reserve releases before, such as in 2011 when supplies were hit by war in OPEC member Libya.

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Economy

Buhari shuts Zanaib Ahmed, Finance Minister, up on naira redesigning policy

Emefiele-Buhari-and-Zainab-
– backs CBN Governor 

The Eyewitness reporter
President Mohammed Buhari has come out to publicly endorse the Naira redesigning policy of the Central Bank of Nigeria (CBN), thus putting paid to the controversy generated by the decision.
In a radio programme on the Hausa service, President Buhari, on Sunday, said that the decision of the  CBN to launch new designs and replace high-value Naira notes had his support and is convinced that the nation will gain a lot by doing so.
The presidential endorsement of the policy has therefore put paid to the criticism of the policy by the Minister of Finance, Budget and National Planning, Mrs Zainab Ahmed.
Mrs Ahmed had openly distanced herself and her Ministry, as the management authority of fiscal policy in the country, from the CBN Naira redesigning policy, saying she was not consulted and warning of the consequences of the decision if implemented.
However, President Buhari expressed support for the policy, saying he was convinced by the reasons given to him by the CBN Governor, Mr Godwin Emefiele that the economy stands to benefit from a reduction in inflation, currency counterfeiting and the excess cash in circulation.
The Senior Special Assistant to the President, (Media & Publicity), Garba Shehu, quoted Buhari in a statement as saying he did not consider the period of three months for the change to the new notes as being short.

”People with illicit money buried under the soil will have a challenge with this but workers, businesses with legitimate incomes will face no difficulties at all.”

The president’s support for the policy has however vindicated the stance of the CBN Governor who had insisted that he needs not to consult the Finance minister, having sought and obtained the approval of the President on the matter.

Mr Emefiele had on  Saturday insisted the CBN will carry on with the redesign of some denominations of the Naira notes, saying it followed due process in its decision.

The apex bank made this known via its verified Twitter account, saying that the exercise was 12 years overdue.

The CBN urged Nigerians to support the measure, stressing that it was in the country’s overall interest.

The CBN said the measure was in line with provisions of sections 2 and 19 of the CBN Act.

“The management of the CBN had duly sought and obtained the approval of President Muhammadu Buhari in writing to redesign, produce, release and circulate new series of N200, N500 and N1,000 banknotes.

“The CBN urges Nigerians to support the currency redesign project, which is in the overall interest of every citizen of the country.

“The hoarding of significant sums of banknotes outside the vaults of commercial banks should be discouraged by anyone who means well for the country,” it said.

According to the CBN, it had tarried for too long considering it had to wait 20 years to redesign.

“The standard practice globally was for central banks to redesign, produce and circulate new local legal tender every five to eight years,” Emefiele claimed.

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Economy

News Alert!  Naira redesigning policy: We don’t need to consult anyone- Emefiele slams Minister of Finance 

CBN Governor, Godwin Emefiele
 The Eyewitness reporter
Barely a few hours after her criticism of the Central Bank of Nigeria(CBN) policy of Naira redesigning, Mr. Godwin Emefiele, the Governor of the Central Bank, has slammed the Minister of Finance, Budget and National Planning, Mrs. Zainab Ahmed, saying the apex bank does not need to consult anyone over its decision to redesign the nation’s currency notes.
Mrs. Ahmed had discredited the policy, which is meant to redesign some of the Naira currencies from N100 to N 1000, saying her Ministry as the fiscal authority, was not consulted by the CBN before the decision was made.
While speaking at the National Assembly Friday during the defence of the 2023 budget, Mrs. Ahmed had warned of the dire consequences of the policy on the economy when implemented.
In a swift reaction, Emefiele said that having sought and obtained the approval of President Mohammed Buhari in writing and also backed by the CBN Act, the Apex bank does not need the approval of anyone else.
” In line with Sections 19, subsections a and b of the CBN Act 2007, the Management of the CBN sought and obtained the approval of President Muhammadu Buhari to redesign, produce, and circulate new series of banknotes at N100, N200, N500, and N1,000 levels.
”That is the position of the law. With this, we don’t need to consult anyone else” Emefiele fired back.
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Economy

Finance Minister discredits CBN’s Naira redesigning policy

Zainab Ahmed and Godwin Emefiele

 

— warns of its dire consequences on economy
as naira continues its fall 
The Eyewitness reporter
There seems to be a great disconnect between the fiscal policy managers and the monetary policy managers of the Nigerian economy over the recent decision of the Central Bank of Nigeria (CBN) to redesign the national currencies.
Less than 48 hours after the CBN Governor, Mr. Godwin Emefiele, announced the decision of the apex bank to redesign the major Nigeria’s currencies, the Minister of Finance, Budget and National Planning, Zainab Ahmad, who is the head of fiscal policy management team of the economy, has sharply disagreed with Mr. Emefiele, the CBN Governor, the head of the monetary policy managers of the nation’s economy.
Mrs. Ahmed, who was at the  2023 budget defence with the National Assembly Friday, feigned ignorance of the CBN Naira redesigning policy, saying she only got the information from the media like every other Nigerian.
She however warned of the dire consequences of the policy on the economy if implemented.
” Distinguished senators, we were not consulted at the Ministry of Finance by CBN on the planned Naira redesigning and cannot comment on it as regards merits or otherwise.

“However as a Nigerian privileged to be at the top of Nigeria’s fiscal management, the policy as rolled out at this time portends serious consequences on the value of Naira to other foreign currencies.

“I will however appeal to this committee to invite the CBN governor for required explanations as regards merits of the planned policy and rightness or otherwise of its implementation now.”

Senator Opeyemi Bamidele, during the 2023 budget defence session, warned CBN of consequences that may arise from the policy.

He had told the Finance Minister that barely two days after the announcement of the policy by CBN, the repercussion of it on the value of the Naira to the US dollar was being felt.

” Just two days after the announcement of the policy, the value of the Naira to a US dollar has risen from N740 to N788 to a US dollar due to the rush in exchange of starched Naira Notes for foreign currencies, particularly the dollar.

“To me, the policy may be a well-conceived one, but the timing going by realities on the ground, is very wrong as the Naira may fall to as low as N1,000 to a US dollar before January 31, 2023, fixed for full implementation of the policy.”

It would be recalled that CBN Governor, Mr. Emefiele had on Wednesday said that the apex bank would redesign the country’s currency from 200 Naira denomination to N1,000 notes.

Emefiele said the action was taken in order to take control of the currency in circulation just as he posited that the bulk of the nation’s currency notes were outside bank vaults and that the CBN would not allow the situation to continue.

According to him, the planned policy was in line with Sections 19, Subsections a and b of the CBN Act 2007, upon which the management of the CBN sought and obtained the approval of President Muhammadu Buhari to redesign, produce, and circulate new series of banknotes at N200, N500, and N1,000 notes.

 The policy is expected to fully take off from February 2023.
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