Global Economic Outlook: Oil Prices Soar After Strikes On Houthi, US Yields Decline

Taiwo  Adekeye, FMVA

January 15, 2024

Oil prices spiked on Friday as some oil tankers changed their route from the Red Sea after overnight strikes by the U.S. and Britain on Houthi targets in Yemen, While U.S. Treasury yields declined on reports that U.S. producer prices unexpectedly fell in December. Brent crude futures rose 88 cents to settle at $78.29 a barrel while the U.S. West Texas Intermediate crude futures surged by 66 cents to settle at $72.68, paring gains after touching a 2024 high of $75.25

Nigeria: Dangote refinery begins production after several years of delays

Dangote oil refinery has begun producing diesel and aviation fuel, after years of construction delays at the 650,000bpd plant. The continent’s richest man Aliko Dangote built the massive refinery on a peninsula on the outskirts of the commercial capital Lagos at a cost of $20 billion. The plant received 1 million barrels of Agbami crude on Monday, taking the total volume received since December to 6 million barrels while the state-owned NNPC Ltd is expected to supply four crude cargoes to the refinery from its February programme. Finally, the massive plant will start by refining 350,000 bpd, hoping to ramp up to full production later this year.

Ghana: Ghana and its official creditors reach a debt restructuring agreement.

Ghana has concluded a deal to restructure $5.4 billion of loans with its official creditors, a milestone in the country’s quest for debt relief as it navigates its way out of severe economic condition.  The agreement with bilateral lenders including China and France was key to unlocking new International Monetary Fund (IMF) financing and will give Ghana an ease to access another $600 million under its $3 billion bailout program. The West African country, defaulted on most of its overseas debt in December 2022 after debt servicing costs spiked.

China: China’s exports rise amid continuing Deflation

Exports grew 2.3% from a year earlier in December, compared with a 0.5% increase in November. Imports grew by 0.2% year-on-year, missing forecasts for a 0.3% increase but still reversing a 0.6% drop a month prior. The export data was driven by semiconductors and electronics, and the recovery is as a result of a cyclical rebound in consumer demand overseas. The deflationary pressure in China’s economy remains as domestic demand is still weak as the property sector continues to weigh on the economy.

India: Retail inflation climbs to four-month high in December

Annual retail inflation rose at the fastest pace in four months in December, driven by a rise in prices of some food items, signaling that the central bank will stay away from interest rate cuts. Annual retail inflation rose to 5.69% in December from 5.55% the previous month, above the central bank’s 4% target. Food inflation, which accounts for nearly half of the overall consumer price basket, was at 9.53% in December, up from 8.70% in November as prices of vegetables, pulses and spices rose. The Reserve Bank of India’s (RBI) monetary policy committee left the benchmark repo rate unchanged at 6.50% for a fifth consecutive meeting last month.

Russia: China-Russia 2023 trade value hits record high of $240 bln

China’s 2023 two-way trade with Russia hit $240 billion, setting yet another new record, as the two countries pushed for closer economic ties even as the war in Ukraine raged on. China, one of the world’s top oil consumers, has emerged as a major economic lifeline for energy exporter Russia who is currently under Western sanctions. China-Russia trade hit $240.1 billion in 2023, growing 26.3% from a year earlier while Chinese shipments to Russia jumped 46.9% in 2023 from a year earlier, and soared 64.2% compared with 2021, before the Russia-Ukraine war. Half of Russia’s oil and petroleum exports in 2023 have been shipped to China while in yuan terms, two-way trade value between China and Russia stood at 1.69 trillion yuan ($235.90 billion) last year, up 32.7% YoY.

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