<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="820" height="547" src="https://cms.cnbcafrica.com/wp-content/uploads/2023/07/Countries-repatriating-gold-in-wake-of-sanctions-against-Russia-study-2-820x547.jpg" alt="" class="wp-image-426114" srcset="https://cms.cnbcafrica.com/wp-content/uploads/2023/07/Countries-repatriating-gold-in-wake-of-sanctions-against-Russia-study-2-820x547.jpg 820w, https://cms.cnbcafrica.com/wp-content/uploads/2023/07/Countries-repatriating-gold-in-wake-of-sanctions-against-Russia-study-2-300x200.jpg 300w, https://cms.cnbcafrica.com/wp-content/uploads/2023/07/Countries-repatriating-gold-in-wake-of-sanctions-against-Russia-study-2-135x90.jpg 135w, https://cms.cnbcafrica.com/wp-content/uploads/2023/07/Countries-repatriating-gold-in-wake-of-sanctions-against-Russia-study-2-768x512.jpg 768w, https://cms.cnbcafrica.com/wp-content/uploads/2023/07/Countries-repatriating-gold-in-wake-of-sanctions-against-Russia-study-2.jpg 960w" sizes="(max-width: 820px) 100vw, 820px" /><figcaption class="wp-element-caption">Ingots of 99.99 percent pure gold are placed in a workroom at Krastsvetmet precious metals plant in the Siberian city of Krasnoyarsk, Russia, January 31, 2023. REUTERS/Alexander Manzyuk/File photo</figcaption></figure>



LONDON, July 10 (Reuters) &#8211; An increasing number of countries are repatriating gold reserves as protection against the sort of sanctions imposed by the West on Russia, according to an Invesco survey of central bank and sovereign wealth funds published on Monday.



The financial market rout last year caused widespread losses for sovereign money managers who are &#8220;fundamentally&#8221; rethinking their strategies on the belief that higher inflation and geopolitical tensions are here to stay.



Over 85% of the 85 sovereign wealth funds and 57 central banks that took part in the annual Invesco Global Sovereign Asset Management Study believe that inflation will now be higher in the coming decade than in the last.



Gold and emerging market bonds are seen as good bets in that environment, but last year&#8217;s freezing of almost half of Russia&#8217;s $640 billion of gold and forex reserves by the West in response to the invasion of Ukraine also appears to have triggered a shift.



The survey showed a &#8220;substantial share&#8221; of central banks were concerned by the precedent that had been set. Almost 60% of respondents said it had made gold more attractive, while 68% were keeping reserves at home compared to 50% in 2020.



One central bank, quoted anonymously, said: &#8220;We did have it (gold) held in London… but now we&#8217;ve transferred it back to own country to hold as a safe haven asset and to keep it safe.&#8221;



Rod Ringrow, Invesco&#8217;s head of official institutions, who oversaw the report, said that is a broadly-held view.



&#8220;&#8216;If it&#8217;s my gold then I want it in my country&#8217; (has) been the mantra we have seen in the last year or so,&#8221; he said.



DIVERSIFY



Geopolitical concerns, combined with opportunities in emerging markets, are also encouraging some central banks to diversify away from the dollar.



A growing 7% believe rising U.S. debt is also a negative for the greenback, although most still see no alternative to it as the world&#8217;s reserve currency. Those that see China&#8217;s yuan as a potential contender fell to 18%, from 29% last year.



Nearly 80% of the 142 institutions surveyed see geopolitical tensions as the biggest risk over the next decade, while 83% cited inflation as a concern over the next 12 months.



Infrastructure is now seen as the most attractive asset class, particularly those projects involving renewable energy generation.



Concerns over China mean India remains one of the most attractive countries for investment for a second year running, while the &#8220;near-shoring&#8221; trend, where companies build factories closer to where they sell their products, is boosting the likes of Mexico, Indonesia and Brazil.



As well as China, Britain and Italy are seen as less attractive, while rising interest rates coupled with work-from-home and online shopping habits which became embedded during the COVID-19 outbreak meant property is now the least attractive private asset.



Ringrow said the wealth funds that performed better last year were those that recognised the risks posed by inflated asset prices and were willing to make substantial portfolio changes. It would be the same going forward.



&#8220;The funds and the central banks are now trying to get to grips with higher inflation,&#8221; he said. &#8220;It&#8217;s a big sea change.&#8221;



(Reporting by Marc Jones; Editing by Mike Harrison)

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Countries repatriating gold in wake of sanctions against Russia – study

DAKAR, May 25 (Reuters)&nbsp;&#8211;&nbsp;Senegal&#8217;s president and African Union chairman Macky Sall said on Wednesday that when he visits Russia and Ukraine in the coming weeks he will push them to unblock exports of grains and fertilizer to avoid widespread famine.



Africa is suffering from disruptions in food supply and soaring prices of basic goods and risks &#8220;disastrous consequences&#8221; if the situation endures, Sall said during a conversation with philanthropist Mo Ibrahim at the Ibrahim Governance Forum.



Nearly half of Africa&#8217;s 54 countries rely on Russia and Ukraine for wheat imports, according to the United Nations Food and Agriculture Organization. Russia is also a major supplier of fertilizer to at least 11 countries.<a href="https://www.reutersconnect.com/all?search=all%3AL5N2WV5UH&amp;linkedFromStory=true" target="_blank" rel="noreferrer noopener">Read full story</a>



&#8220;We have pleaded for a ceasefire, for an end to the war and for the release of all food products &#8230; so that the world doesn&#8217;t know a famine after two years of COVID and almost three months of war,&#8221; said Sall. Russia invaded Ukraine in late February.



&#8220;There are multiple initiatives to call on countries that have (grain) stocks to liberate them &#8230; and to ensure that Russia can authorize the export of cereals from Ukraine and can also export itself. This is the African position,&#8221; he said.



Parts of Africa are already facing record hunger levels, driven by insecurity, climate shocks and the economic downturn caused by the COVID-19 pandemic.L5N2W23Z3



If food supply blockages were to continue and there was a famine, Sall said: &#8220;The world would not be able to contain the consequences because it would be massive on immigration. It would be dramatic for African countries.&#8221;



Sall said on Sunday he would visit Moscow and Kyiv in his capacity as chairman of the African Union, which wants peace in Ukraine through dialogue between the two sides.<a href="https://www.reutersconnect.com/all?search=all%3AL5N2XE0BP&amp;linkedFromStory=true" target="_blank" rel="noreferrer noopener">Read full story</a>



(Reporting by Bate Felix; Writing by Nellie Peyton; editing by Grant McCool)

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African Union head to push Russia, Ukraine to unblock grain exports￼

BERLIN, May 22 (Reuters)&nbsp;&#8211;&nbsp;Russia&#8217;s impact on energy and food prices and security will provide the backdrop to Olaf Scholz&#8217;s first trip to Africa as German Chancellor, a three-day tour of Senegal, Niger and South Africa kicking off on Sunday.



The first stop on Scholz&#8217;s trip is Senegal, which has billions of cubic metres of gas reserves and is expected to become a major gas producer in the region.



Germany is seeking to reduce its heavy reliance on Russia for gas following the Kremlin&#8217;s invasion of Ukraine. It could help explore a gas field in Senegal, a government official said on Friday.&nbsp;<a href="https://www.reutersconnect.com/all?search=all%3AS8N2WV04P&amp;linkedFromStory=true" target="_blank" rel="noreferrer noopener">Read full story</a>



The source said Scholz also wanted to discuss possible cooperation on the development of renewable energy. In Senegal, he will visit a solar power plant after meeting and holding a joint news conference with the country&#8217;s President Macky Sall.



Germany has invited both Senegal, which currently holds the rotating chairmanship of the African Union, and South Africa to attend the G7 summit it is hosting in June as guest countries.



Both countries abstained from voting on a United Nations resolution against Russia&#8217;s invasion of Ukraine, which Moscow calls a special military operation to demilitarize a neighbor it says threatened its security.



Ukraine and Western allies say the war is an unprovoked act of aggression.



The conflict has triggered supply disruptions that have pushed up food and energy prices in Africa. Russia&#8217;s military has blocked exports from ports in Ukraine, a major grains and food supplier to the region. The Kremlin blames Western sanctions for the rising prices.



SECURITY IN THE SAHEL



Scholz will travel later on Sunday to Niger. The country has taken on a bigger role hosting European special forces to stem a jihadist insurgency across the Sahel since European relations with the military junta ruling neighboring Mali have deteriorated.



The European Union suspended its military training mission in Mali due to a lack of guarantees from Malian authorities that military contractors from Russia&#8217;s Wagner Group would not interfere in the work. The group is under EU sanctions accused of human rights abuses.&nbsp;<a href="https://www.reutersconnect.com/all?search=all%3AL5N2X95FS&amp;linkedFromStory=true" target="_blank" rel="noreferrer noopener">Read full story</a>



Russia denies any wrongdoing in Mali or in any other country where Wagner operates. Both Mali and Russia have previously said Wagner Group is not made up of mercenaries but trainers helping local troops with equipment bought from Russia.



Scholz will visit German troops in Niger and discuss the lengthy battle against insurgents linked to al Qaeda and Islamic State that have killed thousands and made swathes of territory ungovernable in the Sahel, south of the Sahara.



On Monday evening Scholz is set to travel to Johannesburg for the final leg of his tour.



(Reporting by Andreas Rinke and Sarah Marsh; Editing by Frank Jack Daniel)

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Russia looms large on Scholz’s first Africa tour as chancellor￼

May 19 (Reuters) &#8211; Russia will send any oil rejected by European countries to Asia and other regions, Deputy Prime Minister Alexander Novak said on Thursday, adding that Europe would have to find substitute supplies that would be more expensive.



The European Commission on Wednesday unveiled a 210 billion euro ($220 billion) plan for Europe to end its reliance on Russian fossil fuels by 2027 and to use the pivot away from Moscow to quicken its transition to green energy. <a href="https://www.reuters.com/business/sustainable-business/eu-unveils-escape-route-russian-fossil-fuels-by-2027-2022-05-18/">read more</a>



Europe receives about 4 million barrels per day (bpd) of Russian oil, Novak said, adding that Russia was ready to reroute those supplies leaving Europe with more expensive crude from other origins.



Western sanctions imposed on Russia after its troops marched into Ukraine in February forced a number of oil buyers to delay or refuse cargoes, which in turn knocked Russian oil production.



Novak said Russian oil production was about 1 million bpd lower in April but had increased by 200,000-300,000 bpd in May with more volumes expected to be restored next month.



He said Russia&#8217;s oil exports were gradually recovering and the country would be able to find export markets because its energy resources were competitive.



($1 = 0.9537 euros)



RegisterReporting by Reuters; Editing by Edmund Blair



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Russia to send oil rejected by Europe to Asia, other regions, says Novak

GABORONE, May 16 (Reuters)&nbsp;&#8211;&nbsp;Botswana, Africa&#8217;s top diamond producer, sees a prolonged ban on Russian diamonds opening the way for synthetic gems to expand market share, the country&#8217;s minister told a mining conference on Monday.



The United States, the world largest market for natural diamonds, imposed sanctions on Russia&#8217;s state-controlled Alrosa&nbsp;ALRS.MM&nbsp;in April, aiming to cut off a source of revenue for Moscow after its February invasion of Ukraine.<a href="https://www.reutersconnect.com/all?search=all%3AL5N2W61HG&amp;linkedFromStory=true" target="_blank" rel="noreferrer noopener">Read full story</a>



Alrosa, the world&#8217;s largest producer of rough diamonds, accounted for about 30% of global output in 2021.



Botswana&#8217;s Minister of Minerals and Energy Lefoko Moagi said the ban on Russia diamonds might push prices up to the benefit of rival producers but he also said the gap would be hard to fill.



&#8220;We see the 30% gap that will be left by the ban being plugged by something else that is not natural. And for us that will be a challenge,&#8221; he said.



Jacob Thamage, head of Botswana&#8217;s Diamond Hub, said uncertainty over the Ukraine conflict makes it difficult for Botswana and other natural diamond miners to fill the supply gap as ramping up operations requires significant investment.



&#8220;You don&#8217;t want to invest a lot of money to up-scale and then the war ends the next day,&#8221; Thamage said. &#8220;We also see the higher prices pushing consumers to substitutes such as the synthetics and this can cause problems for us if we cede the market to unnatural stones.&#8221;



Sales at Debswana, a joint venture between Anglo American&nbsp;AAL.L&nbsp;unit De Beers and Botswana&#8217;s government, accounts for almost all of Botswana diamonds exports. These stood at $3.466 billion in 2021 compared with $2.120 billion in 2020.<a href="https://www.reutersconnect.com/all?search=all%3AL8N2UB4O2&amp;linkedFromStory=true" target="_blank" rel="noreferrer noopener">Read full story</a>



Thamage also fears that consumers might start to shun natural diamonds due to traceability issues.



&#8220;There is an increased fear that buyers of diamonds will begin to treat all natural diamonds as conflict diamonds and therefore shift to unnatural diamonds,&#8221; he said.



(Reporting by Brian Benza, Editing by Nelson Banya and Jane Merriman)

diamonds-black-background

Botswana sees Russian diamond ban opening door to synthetic gems

CAPE TOWN, May 9 (Reuters)&nbsp;&#8211;&nbsp;Angola&#8217;s state-run diamond miner Endiama could face a hit to its operations as Western sanctions on Russia could delay supplies of parts and machinery, according to a government brochure released on Monday.



Western nations have unleashed crippling economic sanctions against Russia after Moscow launched its invasion of Ukraine in late February.&nbsp;<a href="https://www.reutersconnect.com/all?search=all%3AL2N2X1018&amp;linkedFromStory=true" target="_blank" rel="noreferrer noopener">Read full story</a>



Endiama, which holds the exclusive concession for diamond mining rights in Angola, has already flagged an almost one-third reduction in diamond output to 10.05 million carats this year, from a forecast 13.8 million carats.



The company expects revenue of around $1.42 billion from the sale of its diamonds this year.



&#8220;One of the great challenges for 2022 will certainly be to maintain the sustainability of the mines while the war between Russia and Ukraine lasts,&#8221; said the government publication, which was made available at the Mining Indaba conference in Cape Town.



&#8220;Since the sanctions that the United States and Western countries have imposed on Russia may affect some national mining companies, delaying the supply of some machinery, parts and spares,&#8221; it said.



Endiama has signed contracts with Rio Tinto&nbsp;RIO.L&nbsp;to explore its Chiri mine in the Angolan province of Lunda-Norte, while another project, Luaxe, was also expected to begin pilot production, it added, without providing a timeline.



Last month, diamond miner De Beers signed two mineral investment contracts with the Angolan government, the Anglo American&nbsp;AAL.L&nbsp;subsidiary said ahead of a return to the country it left in 2012.&nbsp;nL2N2WI0II



(Reporting by Wendell Roelf; Editing by Susan Fenton)

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Angola’s Endiama says sanctions against Russia could hurt its diamond operations

KEY POINTS



<ul><li>Imposing measures that could reduce, or fully cut, Russian energy supplies to the EU have been a complicated task for the bloc.</li><li>This is because the region is reliant on Russia for several sources of energy, including oil.</li><li>In 2020, Russian oil imports accounted for about 25% of the bloc’s crude purchases, according to the region’s statistics office.</li></ul>



The European Commission, the executive arm of the EU, on Wednesday put forward new sanctions against the Kremlin which will include a&nbsp;six-month&nbsp;phase out of Russian crude imports.



<a href="https://www.cnbc.com/2022/05/04/russia-ukraine-live-updateshtml.html">Russia’s unprovoked invasion of Ukraine</a>, and evidence of war crimes, has pushed the EU to take bolder steps on energy sanctions. But imposing measures that could reduce, or fully cut, Russian energy supplies to the EU have been a complicated task for the bloc.



This is because the region is reliant on Russia for several sources of energy, including oil. In 2020, Russian oil imports accounted for about 25% of the bloc’s crude purchases, according to the&nbsp;<a href="https://ec.europa.eu/eurostat/statistics-explained/index.php?title=File:Extra_EU_imports_of_petroleum_oil_from_main_trading_partners,_2020_and_first_semester_2021.png" target="_blank" rel="noreferrer noopener">region’s statistics office.</a>



“Let us be clear: it will not be easy,” European Commission President Ursula von der Leyen said during a speech at the European Parliament Wednesday.



“Some member states are strongly dependent on Russian oil. But we simply have to work on it. We now propose a ban on Russian oil. This will be a complete import ban on all Russian oil, seaborne and pipeline, crude and refined.”



<h2 class="wp-block-heading" id="h-exemptions"><a></a>Exemptions</h2>



The ban had been a highly controversial topic within the EU, but the move gained more momentum after Germany backed the idea. Two EU nations —&nbsp;<a href="https://www.cnbc.com/2022/05/03/russia-sanctions-eu-nears-oil-embargo-hungary-and-slovakia-want-exemptions.html">Slovakia and Hungary which are both highly dependent on Russian energy — have been demanding exemptions</a>.



Von der Leyen chose not to give any details on exemptions during her speech, but three EU officials, who did not want to be named due to the sensitive nature of the issue, confirmed to CNBC that the commission’s proposal includes this flexibility — giving Hungary and Slovakia a longer period of time to phase out Russian oil.

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EU proposes gradual ban on Russian oil in sixth round of sanctions against Moscow

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Africa’s most vulnerable hit by Russia’s war in Ukraine, says IMF￼

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Brent crude futures plummeted further and are currently hovering around $19 a barrel after falling about 10 per cent on increased concerns over a building supply glut and a lack of available storage. Kola Karim, Chairman of Shoreline Group joins CNBC Africa for more.

COVID-19: Why there are no winners in the oil price crash

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As Nigeria extends the lockdown for another 14 days, OPEC and Allies agreed to cut oil production by 9.7 million barrels from the first of May, through to the end of June.

PwC Nigeria: How the COVID-19 lockdown extension

PwC Nigeria: How the COVID-19 lockdown extension, OPEC production cut impacts Nigeria

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Oil prices rose in trade this morning as the world’s largest oil producers meet later today in what is expected to be a historic agreement to cut production. This market expectation comes at a time when the industry is battling with the impact of the coronavirus crisis on oil demand. Rui Oliveira, CEO at BFA Asset Management joins CNBC Africa to give an Angolan update of the COVID-19 outbreak.

Saudi Arabia

Saudi Arabia, Russia meeting: What will it mean for Angola?

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Brent crude futures have climbed since Friday on hopes that Saudi Arabia and Russia will hold talks and eventually strike a deal to cut output. Ahead of the crucial meeting, Kola Karim, Chairman of Shoreline Group joins CNBC Africa for more.

Shoreline Group: Why the Saudi Arabia

Shoreline Group: Why the Saudi Arabia, Russia meeting delay is a good thing

ABUJA (Reuters) &#8211; Nigeria is looking at reducing its budget by 1.5 trillion naira ($4.90 billion) as the global spread of the coronavirus takes a massive toll on Africa’s largest economy and one of the continent’s biggest oil producers, the finance minister said on Wednesday. 



Roughly 90% of the Nigerian government’s foreign exchange earnings come from sales of oil, prices of which have taken a beating amid lower Chinese demand and a price war between Saudi Arabia and Russia. 



Finance Minister Zainab Ahmed last week said the 2020 budget would have to be cut. The spending plan, which was calculated assuming crude production of 2.18 million barrels a day at a price of $57 per barrel, was passed in December. 



“We are working on a worst-case scenario of an oil benchmark of $30 per barrel and a production of 2.1 million (barrels a day),” Ahmed told reporters at a briefing after a regular Cabinet meeting. 



International benchmark Brent crude on Wednesday reached a 16-year low of about $25 a barrel, dragged down by concerns about the impact of the coronavirus on the global economy, a collapse in oil demand and a supply glut. [O/R] 



Nigeria is still struggling to shake off a 2016 recession, which was caused by the oil price collapse of late 2014, with economic growth currently at around 2%. 



The West African country, which has deep trade ties with China, has also felt the impact of the coronavirus due to disrupted supply chains. 



($1 = 306.0000 naira) 



(Reporting by Felix Onuah; Writing by Paul Carsten; Editing by Alexis Akwagyiram and Leslie Adler)



This article was first published on Reuters Africa <a href="https://af.reuters.com/article/investingNews/idAFKBN2160YK-OZABS">https://af.reuters.com/article/investingNews/idAFKBN2160YK-OZABS</a> and is republished with its permission.

Nigeria eyes $4.9 bln budget cut amid coronavirus

Key Points



<ul><li>IEA Executive Director Fatih Birol and OPEC Secretary General Mohammed Barkindo expressed “deep concerns” about the coronavirus pandemic on Monday.</li></ul>



<ul><li>They singled out public sector spending in vital areas such as health care and education as being especially vulnerable.</li></ul>



<ul><li>OPEC’s Barkindo and the IEA’s Birol did not address Russia specifically in their joint statement, but both “underscored the importance of market stability, as the impacts of extreme volatility are felt by producers.”</li></ul>



Developing countries’ oil and gas income could fall to their lowest levels in more than two decades if current energy market conditions persist, the IEA and OPEC have warned in a rare joint statement. 



IEA Executive Director Fatih Birol and OPEC Secretary General Mohammed Barkindo expressed “<a href="https://www.iea.org/news/iea-executive-director-and-opec-secretary-general-discussed-the-current-situation-in-global-oil-markets" target="_blank" rel="noreferrer noopener">deep concerns</a>” about the coronavirus pandemic on Monday, warning it could have “potentially far-reaching economic and social consequences.” 



Birol and Barkindo said they expect developing countries to see their oil and gas income fall by 50% to 85% in 2020.



They singled out public sector spending in vital areas such as health care and education as being especially vulnerable. 



International benchmark&nbsp;<a href="https://www.cnbc.com/quotes/?symbol=@LCO.1">Brent</a>&nbsp;crude traded at $29.91 Tuesday morning, down around 0.7%, while&nbsp;<a href="https://www.cnbc.com/quotes/?symbol=@CL.1">U.S. West Texas Intermediate</a>&nbsp;(WTI) stood at $28.98, more than 1% higher.



Oil prices <a href="https://www.cnbc.com/2020/03/16/oil-drops-more-than-6percent-breaking-below-30.html">slid 10% in the previous session</a>, as the coronavirus continues to spread worldwide and amid an ongoing price war between OPEC kingpin Saudi Arabia and non-OPEC leader Russia.



Crude futures have more than halved since climbing to a peak in January. 



<h2 class="wp-block-heading">‘Market stability’ </h2>



On Monday, Saudi Arabia’s state-owned oil giant Saudi Aramco said it would likely continue with a planned oil production hike from April into May, reportedly suggesting it was “very comfortable” with an oil price of $30 a barrel. 



Russia, which refused to sign up to OPEC’s proposal of deeper production cuts earlier this month, has claimed it can withstand lower oil prices for as long as a decade. 



OPEC’s Barkindo and the IEA’s Birol did not address Russia specifically in their joint statement, but both “underscored the importance of market stability, as the impacts of extreme volatility are felt by producers.” 



They agreed to “remain in close contact on the matter” and continue their regular consultations on oil market developments.



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The IEA, which advises industrialized nations on energy issues, has <a href="https://www.cnbc.com/2020/03/12/oil-the-losers-of-the-price-war-between-saudi-arabia-and-russia.html">previously warned</a> long-time allies of de facto OPEC leader Saudi Arabia could be the worst hit from a sharp drop in oil prices. 



Last week, Birol <a href="https://www.cnbc.com/2020/03/12/oil-the-losers-of-the-price-war-between-saudi-arabia-and-russia.html">told CNBC</a> that countries like Iraq, Algeria and Nigeria — all OPEC producers — were in a “very, very difficult situation” and would require support from the rest of the world. 



Iraq, OPEC’s second-largest producer, is thought to be particularly exposed to an all-out price war because it has one of the least diversified economies of the producer group — despite relatively low production costs.



(Report by Sam Meredith)



This article was first published on CNBC <a href="https://www.cnbc.com/2020/03/17/opec-iea-warn-some-nations-could-lose-up-to-85percent-of-oil-and-gas-income.html">https://www.cnbc.com/2020/03/17/opec-iea-warn-some-nations-could-lose-up-to-85percent-of-oil-and-gas-income.html</a> and is republished with its permission.

OPEC and IEA warn developing countries could lose up to 85% of oil and gas income this year

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In morning trade oil rose by $1 to around $30 per barrel after the recent sharp declines due to the impact of the covid-19 pandemic and oil price war between Saudi Arabia and Russia, joining CNBC Africa to unpack the oil market outlook as well the global stock market overview is Stephen Innes, Global Chief Markets Strategist at AxiCorp.

Will a COVID-19 triggered recession

Will a COVID-19 triggered recession, oil price war lead to a depression?

Key Points



<ul><li>The combination of an unfolding price war between oil production giants Russia and Saudi Arabia and concern over a potential demand shock from the global coronavirus pandemic have hammered oil prices in recent weeks.</li></ul>



Demand for oil will likely be negative in 2020, adding further downward pressure to plummeting prices, according to BP CFO Brian Gilvary.



Around the time of its earnings report in early February, the energy giant anticipated that demand would weaken by around 300,000 to 500,000 barrels a day.



But on Monday, Gilvary told CNBC’s “Squawk Box Europe”: “If you ask me that question today, it is more like flat demand year-on-year, maybe even negative demand &#8211; we will probably likely see negative demand this year.”



Negative demand for a particular product exists when consumers dislike it to the extent that they would be prepared to pay more than the price of the product in order to avoid having to buy it.



The combination of an <a href="https://www.cnbc.com/2020/03/12/oil-the-losers-of-the-price-war-between-saudi-arabia-and-russia.html">unfolding price war between oil production giants Russia and Saudi Arabia</a> and concern over a potential demand shock from the <a href="https://www.cnbc.com/2020/03/16/coronavirus-live-updates-italy-death-toll-jumps.html">global coronavirus pandemic</a> have hammered oil prices in recent weeks.



International benchmark <a href="https://www.cnbc.com/quotes/?symbol=@LCO.2">Brent crude</a> was trading down 9.3% at around $30.70 per barrel on Monday afternoon while <a href="https://www.cnbc.com/quotes/?symbol=@CL.1">U.S. West Texas Intermediate</a> (WTI) dipped below $30 a barrel to $29.50, down 6.8%. So far this year, Brent and WTI are down 53.8% and 52% respectively.



The tension between OPEC kingpin Saudi Arabia and non-OPEC leader Russia arose after a recent breakdown in negotiations over oil production cuts in response to the outbreak. Riyadh subsequently vowed to ramp up production at sharply discounted prices for April.



Gilvary suggested that activity beyond this year would depend on what “the new normal” becomes for businesses.



“We have got a demand side shock and then you also have the combined issue of a significant amount of oil now coming on the market in April, so the direction of the oil price can only go in one direction, and that is down,” he said.



Gilvary said that at present, BP was starting from a “much stronger financial position” in terms of costs and capital flexibility than when Brent prices fell to $28 per barrel in 2016.



“In our targets for 2021, we had the company balanced at around $40 per barrel Brent, which was the key five-year target we put in place four years ago. We are on track for that,” Gilvary said, adding that BP’s capital was currently running at around $15 billion and could be taken down by up to 20% this year if necessary.



This article was first published on CNBC <a href="https://www.cnbc.com/2020/03/16/as-oil-prices-tank-bp-cfo-warns-demand-could-be-negative-in-2020.html">https://www.cnbc.com/2020/03/16/as-oil-prices-tank-bp-cfo-warns-demand-could-be-negative-in-2020.html</a> and is republished with its permission.

As oil prices tank, BP CFO warns demand could be negative in 2020

Key Points



<ul><li>The International Monetary Fund (IMF) on Thursday said it will be working closely with the Nigerian authorities in the coming days to assess any vulnerabilities which may be exposed by the sharp decline in crude prices.</li></ul>



<ul><li>Nigerian dollar bonds sank to record lows stocks on Thursday hit a new four-year low, as fears grow over the devaluation of the naira currency.</li></ul>



With oil prices plunging amid concerns over a <a href="https://www.cnbc.com/2020/03/12/oil-the-losers-of-the-price-war-between-saudi-arabia-and-russia.html">price war between Russia and Saudi Arabia</a>, and the coronavirus outbreak obliterating stock markets, Africa’s largest economy is in a precarious position.



The International Monetary Fund (IMF) on Thursday said it will be working closely with the Nigerian authorities in the coming days to assess any vulnerabilities which may be exposed by the sharp decline in crude prices, as Nigerian and Angolan dollar bonds sank to record lows.



Nigerian stocks on Thursday headed for their fifth straight day of losses to a new four-year low, and a fall in <a href="https://www.cnbc.com/quotes/?symbol=@LCO.2">oil prices</a> to just over $30 per barrel, rising external debt and a depreciating currency pose a threat to economic stability in the country of more than 190 million people. Nigeria is Africa’s largest economy in terms of GDP (gross domestic product).



While markedly lower oil prices will undoubtedly have broad adverse consequences for the Nigerian economy, the country is not quite as dependent on oil exports as the likes of Angola, which analysts expect to suffer a substantial blow this year.



<h2 class="wp-block-heading">Currency concerns</h2>



However, a prime concern for economists is Nigeria’s managed naira exchange rate, since even prior to the fallout from OPEC’s failure to reach an agreement with Russia on oil production cuts, the country’s foreign exchange reserves were in steady decline.



After the official exchange rate was devalued in 2016, foreign exchange reserves were approaching $25 billion, and the move failed to stop the slide of the parallel market exchange rate, which meant the Central Bank of Nigeria (CBN) was forced to act again the following year when the Nafex (Nigerian Autonomous Foreign Exchange Rate) was implemented. Reserves held just below $30 billion during this period.



“Extrapolating the trajectory observed thus far this year (the foreign exchange buffer shrunk by $2.3 billion during the first two months of 2020) suggests reserves could fall below the $30 billion mark by Q3 (the third quarter) and end the year just above $25 billion,” NKC African Economics Chief West Africa Economist Cobus de Hart said in a note earlier this week.



Capital Economics Senior Emerging Markets Economist John Ashbourne on Wednesday echoed this projection, suggesting that reserves will soon fall below the $30 billion mark, which Nigerian policymakers had identified as a key benchmark.



Ashbourne predicted that the naira will end the year down 8% to 400 NGN against the U.S. dollar. He added that in Nigeria’s case, a weaker currency will not provide a boost to competitiveness, since the country does not have significant non-oil exports or the “domestic manufacturing base needed to substitute for imported goods.”



Reuters reported Thursday afternoon that the naira was being quoted at 370 to the dollar on the over-the-counter spot market.



<h2 class="wp-block-heading">‘Severe adverse consequences’</h2>



Parliament recently green lighted President Muhammadu Buhari’s request for $22.7 billion in foreign borrowing, but while external debt accumulation would usually be expected to support reserves, de Hart suggested that the sharp fall in global oil prices could potentially “more than offset” the boost.



“Firstly, should Brent crude oil prices average roughly $40pb (per barrel) for the remainder of the year, it would reduce Nigeria’s goods export receipts by roughly $14 billion (as opposed to our February baseline for oil prices to average $62.4 billion in 2020) — this may also be a conservative estimate, as it does not take into account any adverse impact on non-oil exports,” he said in the note Monday.



What’s more, Nigeria may have difficulty accumulating external debt following the fall in oil prices and its impact on the macroeconomic outlook, while the jittery investment environment raises the risk of a capital flight, de Hart highlighted.



Having previously backed the authorities to ride out the storm and maintain its foreign exchange rate at current levels in the immediate future, NKC analysts now believe that the naira’s prospects have “deteriorated markedly” and remains set for a “sharp fall” this year if current conditions persist.



The CBN will again be faced with the choice of whether to let the Nafex buckle or continue to artificially prop it up.



“We believe the CBN will continue to provide support in the near term, with a more drastic adjustment more likely in Q3,” de Hart projected.



“If the Nafex is not permitted to buckle, then the black-market rate should, and this might hold more severe adverse consequences for an economy that is now facing a gloomier outlook on multiple fronts.”



This article was first published on CNBC <a href="https://www.cnbc.com/2020/03/13/africas-largest-economy-braces-for-big-hit-as-oil-prices-plummet.html">https://www.cnbc.com/2020/03/13/africas-largest-economy-braces-for-big-hit-as-oil-prices-plummet.html</a> and is republished with its permission.

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