Global Market Updates: Oil Prices Decline Amidst Doubts OPEC+ Will Implement Further Reductions

Taiwo Adekeye, FMVA
December 5, 2023
Monday saw a decline in oil prices due to worries about a fall in demand as well as ongoing ambiguity over the scope and length of production cutbacks by OPEC+. At $78.03 a barrel, Brent oil futures finished the day down 85 cents, or 1.08%. The closing price of U.S. West Texas Intermediate crude futures was $73.04, down $1.03, or 1.39%. Monday’s drop contributes to a 2% decrease from the previous week, following the supply cuts announced on Thursday by the Organization of the Petroleum Exporting Countries (OPEC) and its allies, collectively referred to as OPEC+. Last week, OPEC+ announced voluntary production restrictions, which raised questions about whether or not countries would follow through. Investors were also unclear about the methodology for measuring the reduction.
Nigeria: NGN reverses day’s losses, rises by 10.67% to N837.77/$ at the official market.
The local currency gained 10.67%, concluding at N837.77 against the dollar at the end of Monday’s business, as indicated by data from NAFEM, the official forex trading platform. This signifies an increase of N89.42 or a 10.67% gain in the domestic currency when compared to its closing value of N927.19 on Friday. The intraday peak reached N1021/$1, whereas the intraday low was N701/$1, indicating a substantial spread of N320/$1. According to data gathered from the official NAFEM window, the forex turnover at the conclusion of trading amounted to $73.94 million, reflecting a 32.87% increase compared to the previous day. Nevertheless, the Naira remained unchanged at the parallel forex market, where forex is unofficially traded, with the exchange rate standing at N1165/$1, the same as the closing rate on Friday. Peer-to-peer traders quoted approximately N1161.55/$1. The CBN has announced that it has made installment payments to 31 banks to address the backlog of foreign exchange forward obligations.
Botswana: Botswana plans to prolong and broaden restrictions on the import of fresh produce.
On Monday, Botswana announced its intention to extend and broaden restrictions on the import of certain fresh produce, aiming to achieve self-sufficiency in food production and reduce its import expenditure. The prohibition on importing tomatoes, potatoes, onions, and other produce, which has stirred discontent among farmers in neighboring South Africa and was originally set to conclude at the end of December, will now be extended until the end of 2025, as stated by the agriculture ministry. Starting from July next year, the ministry stated that the count of restricted items would also increase twofold, reaching a total of 32. The agricultural sector in this drought-prone country is relatively modest, contributing approximately 5% to the economic output. Local farmers face challenges due to the competition from more affordable imports from South Africa.
South Africa: South Africa anticipates producing its first EV in 2026.
South Africa’s automotive sector is expected to manufacture its inaugural electric vehicle (EV) in 2026, as stated by the trade minister on Monday while outlining the country’s plans for transitioning to green transport. The electrification of transportation stands as a fundamental pillar supporting South Africa’s Just Energy Transition (JET) plan aimed at fostering a low-carbon and climate-resilient economy. According to the JET plan, a substantial investment of 128.1 billion rand ($6.84 billion) is projected to be required from 2023 to 2027 to enable the transport sector to make a significant contribution to South Africa’s decarbonization goals. South Africa stands as the primary automotive manufacturing center on the African continent, accommodating renowned global brands like Toyota, Isuzu, Volkswagen, Mercedes, and others.
Philippines: The Philippines is set to receive $10 billion in climate funding from the Asian Development Bank.
On Monday, the ADB announced its commitment to allocate $10 billion in climate finance for the Philippines from 2024 to 2029. The funds, as stated by the ADB during the COP28 climate summit in Dubai, will support the Philippines in fulfilling its climate action commitments under the Paris Agreement. The ADB indicated that the funding constitutes a component of the multilateral lender’s forthcoming program tailored for the Philippines. This program is designed to bolster initiatives related to low-carbon transport, renewable energy, the establishment of carbon markets, flood management, resilient coastal development, food security, and adaptive health and social protection. The Philippines, comprising over 7,600 islands, ranked first on the 2022 World Risk Index, an assessment that identifies populations most vulnerable to earthquakes, cyclones, floods, droughts, and sea-level rise.
Russia: Russia’s seaborne diesel exports increased in November due to the lifted ban, production surges.
In November, seaborne diesel and gasoil exports from Russian ports increased by 8.5% compared to the previous month, reaching approximately 2.8 million metric tons, following the lifting of an export ban and an expansion in production. Russia imposed a temporary ban on diesel exports from September 21 to address a domestic shortage. The embargo was partially lifted on October 9, allowing Russia to resume exports of ultra-low-Sulphur diesel (ULSD) through Transneft pipelines. Furthermore, on November 22, Russia removed the ban on the export of summer diesel. Diesel output from Russian refineries increased to 238,120 tons per day in the first three weeks of November, over 11% more than the average for October. Russia has redirected its diesel supplies to Brazil, Turkey, African, and Asian countries following the implementation of a complete European Union embargo on Russian oil products in February of this year.
Mexico: The nation’s core index is expected to decrease, while headline inflation increased in November
Headline inflation in Mexico is expected to have accelerated in November, while the core index would have continued to ease, reinforcing expectations that the central bank will implement interest rate cuts starting next year. A seasonal increase in electricity prices brought on by the expiration of summer subsidies in certain cities was primarily responsible for the recovery. Core inflation, excluding certain volatile food and energy prices, was projected to decline for the tenth consecutive month to 5.34% year-on-year, marking its lowest level since October 2021.In the previous month, Mexico’s central bank kept its benchmark interest rate unchanged at 11.25%, stating that it is likely to maintain the reference rate at its current level for some time. This reflects a moderation in language compared to its previous statements.

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