I have just observed the seasonal price of various grades of crude. In the last few months, they have been trading much higher. I predicted on this site that oil should trade higher in the first quarter of 2021, and the current prices for Brent and Bonny Light are about $53 to $55 per barrel. These are the signature products.
The prices will remain stable, while seasonally inching up perhaps to the $60 mark per barrel if current indices remain. The moving factors are: the result of USA’s election; more optimism, and expectations of less antagonism from the US government against OPEC; the gradual but uncertain recovery of COVID infested global economies; tighter volume release into the market through OPEC supervision; the winter surge as a result of the cold climate; the perception of OPEC and OPEC countries as disciplined in their compliance to production cut volumes; and declined shale production volumes during the COVID-dictated low price fallouts in most of 2020.
This is all good news, but the volatility in prices will remain as we move to the July-September summer period.
Now, for oil producing countries the world over, this is time for strategic thinking.
Smart producers will do the following:
A. Continue to cut down cost of production. The eye on the number for Africa must be $10 -$15. Arab countries are driving at $7.
B. Privatize more fields and encourage greater private sector funding of production.
C. Save massively and avoid cataclysmic econometrics.
D. Borrow less or push borrowing only to projects with internalized pay-back capacity.
E. Release non-active or abandoned fields to new investors and use the income to pay down short term or strangulating loans.
F. Diversify to alternative sectoral investments, especially low hanging fruits provided by gas, downstream self-financing investments like petrochemicals, etc., on export focused bases.
G. Focus on growing your regional markets for supply predictability. African markets are still virgin and if we don’t reach out to control this, the very efficient Arab markets will.
So, overall message is, enjoy the hay while the sun shines but plan for a predictable tomorrow.
Unsung Heroes of my books and service
In the rush of the book presentations, it was easy to remember just the celebrities and forget many more who supported me behind the scenes and made my service in government and the publication of the books possible. I apologize to all who I left out. I will never really have a complete list.
But let me mention, Timi Alaibe, Sholaye Jeremi, Douglas Ndekwu, late Chief Luke Okpuno, Musa Danjuma, Senator Ben Obi, Okey Anueyiagwu and Lafor Olateru-Olagbegi. Some of these people were helpful in opening the contact doors to those who ultimately helped me get a chance at service, while others remained my close friends through the thick and thin of my service years, and now.
And of course, not to forget Thelma Ogechi Chukwu and her staff at Telmek for the morale and technical support always selflessly provided. Last but not least is Mr Tunji Olowolafe, who remains one of the most selfless people I know. He worked tirelessly to get me the links that helped me get to Abuja, convinced me to serve when I was jittery, and asked nothing of me till the end of service. To all of you and many more, a big Thank You.