Oil Prices Surge Amid Lingering Geopolitical Tensions, Positive Economic Data

Taiwo Adekeye, FMVA

January 31, 2024

Oil prices increased on Tuesday, due to an elevated global economic growth outlook and heightened tensions in the Middle East, wadding off worries about Chinese demand. March Brent crude future, which expire on Wednesday, rose 47 cents to settle at $82.87 a barrel while U.S. West Texas Intermediate crude settled up $1.04, closing at $77.82.

Nigeria: Central bank clears additional $64 million FX backlog

Nigeria’s central bank said on Tuesday that it has made an additional payment of $64.44 million of verified foreign exchange backlog owed to airlines, bringing total payments to $136.73 million. A national daily on Wednesday reported some of the affected foreign airlines as saying the effort is yet  a drop in the ocean when compared to the huge $650 million funds still trapped and cannot be repatriated from the country. Africa’s biggest economy has about $7 billion in forex forwards that have matured, a major concern for investors as foreign currency shortages continue to weigh down the Naira currency. However, about $2.5 billion of the backlog across sectors such as manufacturing, aviation and petroleum has been paid.

Kenya: Kenya to buyback Eurobond in Feb or March

Kenya is looking forward to buy back in February or March some of its $2 billion Eurobond. Declining hard currency reserves, a steep weakening of the local currency and revenue challenges have raised questions about Kenya’s ability to pay off the bond, which matures in June. However, the Kenyan government was no longer counting on the Trade and Development Bank (TDB), an African development finance institution, to organize a $1 billion syndicated loan for Kenya, as initially planned

South Africa:  The Rand declines slightly following changes in budget balance and money supply.

South Africa’s Rand edged lower on Tuesday after local budget balance and money supply figures, investors await the Federal Reserve’s monetary policy decision later this week. However, Global attention this week is on the U.S. central bank’s interest rate decision today, which it is expected to leave rates unchanged. The Rand traded at 18.8500 against the USD, about 0.2% weaker than its previous close, while the dollar index was last up 0.05% against a basket of currencies. South Africa’s budget surplus decreased to 19.47 billion rand ($1.03 billion) in December from 44.97 billion rand in the same month a year earlier. South Africa’s benchmark 2030 government bond was weaker, with the yield up 1.5 basis points to 9.780%.

Japan: Japan December jobless rate falls to 2.4%, vows to boost household income

Japan’s jobless rate fell to 2.4% in December from the previous month, the jobs-to-applicants’ ratio slipped to 1.27 in December, matching the level seen in June 2022. However, Japanese Prime Minister Fumio Kishida has vowed that his government would do everything possible to achieve real income growth to put a decisive end to deflation. The current administration has lifted minimum wages and sought to raise pay for public-sector workers in medical and welfare services as well as truck drivers, and the class of non-regular workers including part-timers and contract workers.

 India: IMF raises India’s growth forecast to 6.5%

India’s economy is likely to grow at 6.5% in the financial year starting April 1, 2024 and at a similar pace in the following year. The IMF also revised its forecasts for GDP growth in the world’s fifth largest economy during the current financial year to 6.7% from 6.3% in October. Growth in India is projected to remain strong at 6.5% in both 2024 and 2025, with an upgrade from October 0.2% for both years, reflecting resilience in domestic demand. The IMF’s projection of 6.5% is lower than the Indian federal government’s expectation of 7% growth in the economy in the next fiscal year, as stated in its latest economic review released on Monday.