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Crude Oil Price Rises To 5-month High At $70.6pb

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International benchmark Brent futures rose to  highest level since November 2018 yesterday, on account of OPEC’s ongoing supply cuts and U.S. sanctions against Iran and Venezuela.

Brent futures were at $70.67 per barrel yesterday up 33 cents, or 0.5 per cent from their last close.

The U.S. West Texas Intermediate (WTI) crude were up 33 cents, or 0.5 per cent, at $63.41 per barrel. Brent and WTI both hit their highest levels since November last year at $70.76 and $63.48 per barrel, respectively, early on Monday.

“Brent prices increased more than 30 percent year-to-date as OPEC+ continued to cut supply for 4 months in a row and optimism over U.S.-China trade talks helped to buoy the demand outlook,” U.S. bank J.P. Morgan said in a note released over the weekend.

Energy consultancy FGE said the OPEC-led supply cuts meant “excess inventories are disappearing and the market looks healthy,” adding that “the market is poised for prices to rise to $75 per barrel or higher” for Brent.

Oil prices have also been driven up by U.S. sanctions against OPEC-members Iran and Venezuela. “Sanctions can cut 500,000 bpd of Venezuelan exports. Add that to a cut in Iran waivers and prices can rise substantially,” FGE said. There remain, however, some factors that could bring prices down later this year.

Russia is a reluctant participant in its agreement with OPEC to withhold output, and Russian oil production may increase again if a deal with the producer club is not extended once it expires before July 1, Energy Minister Alexander Novak said on Friday.

Russian oil output reached a record high of 556 million tonnes, or 11.16 million barrels per day (bpd), last year. In the United States, crude oil production reached a record 12.2 million bpd in late March.

U.S. crude exports have also risen, breaking through 3 million bpd for the first time earlier this year. “With the new Permian pipelines (from July), we can see a boost of 500,000 to 600,000 bpd in U.S. exports,” FGE said.

Meanwhile, Saudi Energy Minister Khalid Al-Falih met with President Muhammadu Buhari and discussed cooperation between the two OPEC member countries in the energy sector, the minister said in a tweet on Saturday.

Al-Falih said that he met with Buhari on the margins of the World Economic Forum on the Middle East and North Africa in Jordan, where they discussed “ways of cooperating in the fields of energy and industry, and the importance of cooperation for the stability of the global oil market.”

Meanwhile, President Muhammadu Buhari yesterday met with six different groups of investors at the sidelines of the Annual Investment Meeting in Dubai, United Arab Emirates. He had a message for them all: Come to Nigeria and prosper. Come and have handsome returns on your investments, within the shortest possible time.

According to a statement by his special adviser media, Femi Adesina, said Sheikh Ahmed Al Maktoum is a member of the Dubai ruling family. He is also a private investor and member of several boards of companies, both state owned and private. He is interested in establishing a power plant in Lagos, and studies have already been completed.

He said Lulu Group operates a chain of supermarkets in the Middle East and Asia. Mr Yusuff Alli, Chairman of the group, told President Buhari that the outfit, with headquarters in Abu Dhabi, has over 164 supermarkets and shopping malls. It employs over 50,000 people.

According to presidential spokesman, the interest is to work with Nigerian farmers, using local produce to ensure food security. Quality, affordability and hygiene are the watchwords of the company.

He said “Also in bilateral meeting with President Buhari was Sheikh Hussain Al Nowais, Chairman of Amea Power. The company develops, owns, and operates thermal and renewable energy projects in Africa, the Middle East and Asia. Its wide range of power solutions include conventional – gas, coal, oil, and renewable – solar, wind and hydro.

“Apart from power, the company, which owns Rotana Hotel chain, is also interested in the hospitality sector in Nigeria.

“Also on cue was Sheikh Ali Rashid Lootah, Chairman, Nakheel Properties and Limitless Group.

“One of the world’s leading developers and a major contributor to Dubai’s real estate transformation, the company’s current and future retail project portfolio covers nearly 17 million square feet of leasable space. They are keen to expand their investments in Nigeria.

“Sheikh Khalid Bin Kalban is the CEO of Dubai Investments. His meeting with the Nigerian president centred around real estate, processing industries, mergers and acquisitions, health care, education, and financial investments.

“Abu Dhabi Fund for Development (ADFD) has supported over 66 projects in 29 African countries. They include rural solar power and water projects, and that was the focus of the discussion, as Sheikh Mohammed Saif Al Suwaidi, the CEO, met with President Buhari.

He said the bilateral sessions were not concluded, till the Nigerian president had met with Mr Jitender Sachdeva, CEO Skipperseil Group. An integrated energy company with operations in the manufacturing of substation equipment, discussions were on engineering processing, construction of transmission lines and substations for utilities, institutions and industries.

“The company’s CEO expressed delight at meeting with President Buhari, and looked forward to doing good business in Nigeria.

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