Oil Falls 1% On Worries Over China’s Economic Growth Strategy

March 7, 2024

Taiwo Adekeye, FMVA

Oil prices increased marginally due to small build in US crude stocks and Fed rate cut

On Wednesday, oil prices inched up by approximately 1% due to a less-than-anticipated growth in US crude inventories, significant reductions in distillate and gasoline stocks, and statements from the US Federal Reserve chief stating the expectation of interest rate cuts later this year. Brent futures edged up by   1.1% to settle at $82.96 a barrel, while U.S. crude increased by 1.3%, to settle at $79.13.

India: OPEC anticipates an increase in its share of Indian oil imports.

OPEC is expected to regain a larger share of India’s oil imports in coming decades, driven by the proximity of its supplies, after a recent erosion of dominance due to competition from discounted Russian oil. The share of oil from the Organization of the Petroleum Exporting Countries (OPEC) imported by India declined from about 65% in 2022 to 50% in 2023, after New Delhi became the biggest buyer of seaborne Russian crude in the aftermath of Moscow’s invasion of Ukraine. OPEC Middle East producers remain ideal suppliers to the Indian market, given their close proximity. However, OPEC supplied 54% of India’s imported oil in January.

Uganda:  Central bank hikes rate by 50bps

Uganda’s apex bank on Wednesday raised its key interest rate by 50 basis points at a special meeting called after the local shilling currency slipped to an all-time low. The decision to hike rate by the central bank to 10.00% came after three meetings where the rate was kept constant. The shilling was down about 3% against the dollar so far, hitting a record low of 3,955/3,965 to the U.S.D on Feb. 26 before recovering some ground in recent sessions. The depreciation of the shilling against the USD has triggered the need for monetary policy to be tightened. However, local currency decline was partly caused by offshore investors pulling funds from Uganda to seek higher yields elsewhere.

Senegal: Senegal to hold Presidential election on March 24

President Macky Sall has scheduled a delayed presidential election for March 24, after a top court ruled that a request to hold the vote after his mandate expires on April 2 was unconstitutional and does not hold water. Sall dissolved the government and replaced Prime Minister Amadou Ba with Interior Minister Sidiki Kaba so that Ba, the ruling coalition’s presidential candidate, can focus on his electoral campaign. The new date was welcomed by opposition presidential candidate Anta Babacar, who is among the majority of the 19 contenders in the race who are pushing for the vote to be held as soon as possible.

Egypt: Egypt successfully secures IMF deal amid sharp decline in pound and a substantial rate hike

Egypt secured a substantial $8 billion deal on Wednesday with the International Monetary Fund, hours after the apex bank hiked its rate by 600 basis points in a bid to stabilize the economy.  The North African nation would obtain a $1.2 billion loan for environmental sustainability, securing more than $9 billion from IMF. The currency weakened to beyond 50 Egyptian pounds to the USD, far beyond previous records from about 30.85 pounds. Additionally, the central bank has raised the overnight lending rate to 28.25% and its overnight deposit rate to 27.25% in a bid to tame inflation, which rose to record levels last year and has caused years of hardships to tens of millions of Egyptians.