Oil Climbs As Mid East Tensions Escalate

Taiwo Adekeye, FMVA

February 23, 2024

Oil futures closed higher on Thursday, driven by ongoing unrest in the Red Sea as Iran-aligned Houthis intensified attacks near Yemen. However, gains were affected by a substantial build in U.S. crude inventories. U.S. crude inventories was up by 3.5 million barrels to 442.9 million barrels in the week ending Feb. 16.  Brent crude futures closed higher by 0.77% at $83.67 a barrel while U.S. West Texas Intermediate crude futures were also up by 0.9% at $78.61 a barrel.

Nigeria: Nigeria’s economy grows steadily, propelled by an increase oil output rises

In Q4’ 2023, Nigeria’s economy expanded by 3.46%, maintaining a pace similar to the preceding year. The uptick was attributed to an increase in oil output and the impact of government reforms aimed at fostering growth. Gross domestic product improved in the two previous quarters of 2023 while GDP also grew by 2.54% in the third quarter and 2.51% in the second. Growth in the final quarter of 2022 was 3.52% in annual terms. The boost in Q4’ of 2023 was driven mainly by the services sector, which recorded a growth of 3.98% and contributed 56.55% to the aggregate GDP. Additionally, Average daily oil output rose to 1.55 million barrels per day, up from 1.34 million a year ago.

Zambia: Zambia’s kwacha stands out as Africa’s best-performing currency in 2024.

Zambia’s kwacha is Africa’s best performing currency against the U.S. dollar so far this year after the central bank tightened its monetary policy. The kwacha has rallied by 13.8% to 22.8 against the USD in 2024, after the central bank raised commercial banks’ reserve ratios and then went hawkish on interest rates earlier this month, in a bid to reverse a decline in the currency that had pushed up inflation. However, copper production, which is a primary source of foreign exchange for the southern African state, has declined despite government initiatives to stimulate the sector.

South Africa: Rand ends the week down amid rising dollar

South Africa’s rand further declined on Friday after losing ground against a surging USD all week as a result of indications that the Federal Reserve might hike rate for a long time. The rand traded at 19.0550 to the dollar, about 0.6% lower than its last close. It began the week at around 18.6800 to the dollar while the dollar was last up about 0.12% against a basket of global currencies and on track for a second weekly gain in a row. The South African benchmark 2030 government bond was slightly stronger, with the yield down by 3 basis points to close at 9.765%.

Algeria: Algeria and Mauritania open border gate to promote trade

The presidents of Algeria and Mauritania opened on Thursday a gate at the border of the two north African countries aimed at strengthening their bilateral ties and promote trade. The two national leaders have also agreed to set up a free trade zone and build an 847 kilometer (526 mile) road that will link the Algerian town of Tindouf to Mauritania’s Ezouirat. Algeria has also announced it would invest $442 million in energy projects and also open trade zones in 2024 with Mali, Niger and Libya.  The North African nation is heavily dependent on oil and gas sales, is striving to diversify its economy while Its exports outside hydrocarbons reached a record of $7 billion in 2022, and totaled $5.3 billion in the first 11 months of 2023.

India: India simplifies the approval process for foreign direct investment in the space sector.

India will allow 100% foreign direct investment in the manufacture of satellite systems without official approval and eased the rules for launch vehicles, aiming for a larger market share of the global space. India’s space aspirations received a boost when it became the first country to successfully land a spacecraft near the unexplored south pole of the moon in August. This achievement marked the fourth successful soft landing globally, coming shortly after a Russian mission faced difficulties in the same endeavor. India has privatized space launches and is aiming for a five-fold increase in its share of the global launch market, which some expect to be worth $47.3 billion by 2032. India currently accounts for about 2% of the space economy. The second economy in Asia has privatized space launches and is aiming for a five-fold increase in its share of the global launch market, which will worth $47.3 billion by 2032. India currently accounts for about 2% of the space economy.