Crude Oil Price Falls Below $70 Per Barrel

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The crude oil market continues to suffer from bearish sentiments caused by the new Omicron COVID-19 variant, which has pushed crude oil prices below $70 per barrel.

Crude oil benchmark, Brent closed at $68.88 per barrel while West Texas Intermediate (WTI), also closed with a 0.92% decline at $65.57 per barrel, while Nigeria’s crude, Bonny Light closed at $69.81 per barrel, representing a 5.05% decline. With the new strain of the virus that has proven to be vaccine resistant, crude prices saw a significant downturn in the previous week.

“With uncertainty over Omicron, we expect that OPEC will shelve its target to increase output in January and keep its quota flat,” Morgan Stanley, an American multinational investment bank and financial services company wrote in a note to clients.

Nigeria has so far recorded three cases of Omicron and the Nigeria Centre for Disease Control (NCDC) said they were found after collection of samples for the stipulated day two test for all travellers to Nigeria.

“These cases were recent arrivals in the country in the past week. Follow up to ensure isolation, linkage to clinical care, contact tracing and other relevant response activities have commenced. 

Before the advent of the COVID-19, Nigeria’s oil sector generally accounted for about nine per cent of the country’s gross domestic product (GDP). Between October and December 2020, the oil industry contributed 5.9 per cent to the total real GDP.

Nigeria is one of the largest oil producers in the world and at the beginning of 2020, its daily oil production exceeded two million barrels. Afterwards, the production decreased and reached 1.14 million barrels per day during January 2021, the lowest value recorded in recent years. Overall, the lowest daily production of oil in Nigeria was recorded during the first three months of 2021.

Even though the drop in the oil prices has not yet gone below the benchmark used for the 2022 budget proposal, experts expressed fears that any attempt to push for global lockdown would adversely affect mono economies such as Nigeria’s.  

Aviation sector at risk, IATA cries out 

The IATA, representing some 290 airlines comprising 83 per cent of global air traffic, had earlier reported recovery in air travel, which continued in October 2021 with broad-based improvements in both domestic and international markets.

The discovery of the Omicron variant of COVID- 19 has forced nations to impose a series of restrictions mainly on African countries. 

Responding to the development, IATA said yesterday that the imposition of travel bans by governments, against the advice of the World Health Organisation (WHO), could threaten the sector’s recovery. 

The global aviation body said in its monthly travel update that total demand for air travel in October 2021 (measured in revenue passenger kilometres or (RPKs) was down 49.4 per cent compared to October 2019.

The report noted that African airlines’ traffic fell 60.2 per cent in October versus two years ago. 

Traffic in September was down 62.1 per cent over the corresponding 2019 period. October capacity was down 49.0 per cent and load factor declined 15.2 percentage points to 54.1 per cent.

Walsh said, “The lifting of the US restrictions on travel from some 33 countries last month raised hopes that a surge in pent-up travel demand would buoy traffic over the coming Northern Hemisphere winter. 

“But the emergence of the Omicron variant panicked many governments into once again restricting or entirely removing the freedom to travel-even though WHO advised that ‘Blanket travel bans will not prevent the international spread, and they place a heavy burden on lives and livelihoods.’  

He said to some reasonable extent, the character of the coronavirus had been understood and the Omicron variant could not be as devastating. 

Also commenting, the CEO of Cross Wings Air, Commodore Hambali Tukur (Rtd), told our correspondent that the omicron virus is threatening to throw the aviation industry into the COVID-19 lockdown era. 

He said now that countries were already issuing travel restrictions, the impact on travels, aviation and the economy will be huge adding that Nigeria could not afford another economic lockdown.

An aviation analyst and the Chief Executive Officer of Aglow Aviation Services Limited, Mr Tayo Ojuri, also said the imposition of travel bans by countries would hurt not only the global aviation world but entire Africa. 

He said South African Airlines, which was just resuscitated would find it difficult to stand with the new wave of restrictions.

“In Africa, South African Airways that has just been restricted will be hurt with the ban on Southern Africa. Where are they going to get money to operate? In Nigeria, too, a lot of people would be discouraged from travelling,” he said.
– Daily Trust

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