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General News

Q2 outlook for Oil & What it means for the Nigerian Economy

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By Lukman Otunuga, FXTM Research Analyst,

Q2 Outlook – WTI Oil: Near 30% rally in Oil so far this year unjustifiable

The near 30% rally in WTI Oil during the first quarter of 2019 is difficult to justify when taking into account the progressive concerns that are mounting regarding a global economic downturn. The rally has been supported by improved market confidence that efforts from OPEC+ have tightened the supply in the market, but whether this encouraging sentiment can continue would likely depend on whether Russia continues to support production cuts.

As such, a result to an unprecedented 30% rally over the last quarter, the commodity is going to enter the new quarter as a prime contender to suffer from a market correction. The probability is high that fears over a deceleration in world economic momentum will only get louder as the year progresses, meaning Oil investors will need to re-assess into expectations what impact a global slowdown will have on future demand. A plethora of evidence through data releases from different economies across the globe has already pointed out that a downturn in growth is impending – if the slowdown hasn’t already arrived.

Market perception is that OPEC cuts are working but demand outlook at risk

One of the major risks for the price of Oil in the second quarter is the increased probability that world economic forecasts for 2019 will be revised lower. While a great volume of noise in the Oil atmosphere is created around headlines involving production, OPEC or even more recently OPEC+, it often gets underlooked just how important Oil demand is for its valuation. Reduced demand is a negative for Oil price and the prospect of further lower demand on global economic health fears will risk re-igniting oversupply concerns that have dominated headlines since the spectacular price crash first occurred in 2014, despite repeated measures and attempts by OPEC and co to rebalance the market.

Iran waivers a wildcard, Saudi Arabia to remain committed to output cuts

If you were to take the contrarian view, there are a few reasons to remain optimistic that Oil can resume its price rebound in Q2. This would however, include some unpredictable risk elements around politics for a commodity that has historically behaved with an extreme level of sensitivity to politics.

Waivers on Iranian sanctions are set to expire over the coming months and if President Trump adopts a hardline approach that results in the taps for Iranian Oil supply being turned off, the subsequent change in the production outlook would prove tempting for potential buyers. Venezuela is another market that has come under the threat of sanctions following recent domestic unrest, while suspicions remain that Saudi Arabia will maintain its underlying commitment towards tightening the available supply of Oil to achieve stronger valuations to help the Kingdom achieve its fiscal targets.

Do not underestimate risk Trump speaking against Oil rally will have on future outlook

Another factor that needs to be taken into account when factoring in potential risks that can swing the hammer of the Oil price in either direction is President Trump.

The President of the United States has made it perfectly clear on numerous occasions that his desire is for Oil prices to return to lower levels for a prolonged period. He has already commented via social media feeds that the Oil price is too high and while he might not be President of a nation that is either a traditional member of OPEC nor OPEC+, he carries the ability to influence world financial markets.  When it comes to President Trump’s influence on financial markets it is never an occasion that investors can prepare for when it will happen, but Trump has proven in office that he has a tendency of getting his way in the end, and I would personally not want to be on the wrong side of the trade when the President of the United States is demanding for lower Oil valuations.

What does this all mean for the Nigerian economy?

Although Nigeria remains on a quest to diversify away from Oil reliance, a handsome chunk of the nation’s export earnings is from Oil sales. While rising Oil prices will boost government revenues, provide foreign exchange stability and support economic growth, it leaves the country vulnerable to external shocks. With robust production from US Shale stimulating oversupply concerns and fears around slowing global growth potentially impacting demand, Oil’s upside seems limited. If Oil prices end up depreciating back below $60 in Q2, this will not only impact growth prospects but also Nigeria’s efforts to support its 2019 budget. The ramifications of such a development will most likely complicate the Central Bank of Nigeria’s efforts to cut rates further in an effort to boost economic growth. However, further signs of Nigeria breaking away from Oil reliance to other sustainable sources of growth such as agriculture have the potential to limit shocks created from Oil volatility.

WTI knocking on the door at $60, but is anyone home?

Focusing on the technical picture, WTI Crude has reached tough resistance on the monthly charts with $60 acting as a barrier for bulls preventing prices by being pushed higher. The $60 level ironically also reflects the 50% Fibonacci retracement level of the October – December 2018 downtrend, which helps explain why we are noticing a trend of selling pressure jumping back in the market close to $60.

Until Oil is able to secure a decisive monthly close above $60, it looks like a ceiling is in place for Oil bulls and selling rallies below this level is going to remain as a tempting strategy for bearish investors. A weekly close below $56 will act as a signal for further downside with $52, $50 and $47.80 acting as key points of interest.

If prices are able to conquer $60, Oil has scope to challenge $65.

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Ugo Onwuaso is an ICT enthusiast. He believes technology should be used for general good. He holds a Master of Public Administration (MPA) degree from the Lagos state University. Dear Reader, Your support matters. But we believe that technology makes life more exciting and helps improve the lives of people around Nigeria and indeed the world. That is why, we have devoted our energy to independent reportage of technology and finance and how they affect lives. Our incisive and analytical view of how technology news affects the daily life help individuals and organizations make up their minds. Quality journalism costs money. Today, we're asking that you support us to do more. Kindly support our effort to deliver technology and finance journalism to everyone in the world. Donate as little as N1,000. Bank transfers can be made to: UBA Plc 1017156876 Communication Week Media Ltd

General News

FG, Netherlands Partner on Digital Migration for NIS

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The Nigeria Immigration Service (NIS) strengthened bilateral relations with the Netherlands’ government through an agreement targeted at improving migration governance and border security.

This partnership was confirmed during a meeting at the NIS headquarters in Abuja, which was attended by a Dutch team led by Jurgen Bartelink, Chargé D’Affaires of the Embassy of the Netherlands in Nigeria.

The meeting focused on increasing bilateral migration cooperation and came after the comptroller general of Immigration, Kemi Nandap, paid a working visit to the Netherlands.

Under the agreement, the Dutch government pledged to continue supporting technology-driven solutions targeted at boosting Nigeria’s border control systems and improving migration management.

During the Netherlands Embassy diplomats handed over essential operational tools, such as Edison Software licence keys and the Passport Examination Programme Manual App.

According to NIS spokeswoman ACI Akinsola Akinlabi, “The partnership focuses on enhancing bilateral collaboration on migration management and reviewing ongoing capacity-building efforts.”

Bartelink, Chargé d’Affaires of the Netherlands Embassy in Nigeria, underlined the Netherlands’ commitment to helping Nigeria’s continuing border security and migration reforms.

Also speaking, Rob Bokhoven, head of international affairs, repatriation, and deportation services at the Dutch Ministry of Justice and Security, emphasised the country’s strong bilateral relations and announced plans to share a mobile border software solution with the NIS.

Receiving the equipment, Nandap said the delivery of the gadgets would boost West African country’s border security, significantly improve the service’s document verification border management capabilities and support the implementation of Nigeria’s National Migration Policy.

“The engagement will further reinforce the strategic partnership between Nigeria and the Netherlands advancing shared goals in migration governance, border security and international cooperation,” she added.


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AfDB Cuts Nigeria’s Growth Projection to 3.2%

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Peter Enogb, principal country economist, African Development Bank (AfDB), says the rise in global uncertainty, emanating from increases in global trade tariffs, has slowed Nigeria’s projected growth to 3.2% in 2025.

“Without this level of heightened uncertainty, our projections would probably have been somewhat higher. We’ve reduced our projections for Nigeria. We initially were projecting 3.5% – 3.6% growth in 2025.

“But given the current situation, our models are showing that we’re taking a more cautious approach. So that’s why we produced this and, of course, the main driver is uncertainty in the global economy,” Enogb said.

He said this at the launch of the 2025 Nigeria Country Focus Report (CFR) on Thursday.

AFDB projected that real GDP growth would hit 3.1% in 2026. Following the 2024 consumer price index (CPI) rebasing, with lower weights for food items, the inflation rate is expected to reduce over the medium term to 24.7% in 2025 and 17.3% in 2026.

As imports start to rise over the medium term, the current account is projected to decline to 3.9% of GDP in 2026.

The National Bureau of Statistics (NBS) reported that Nigeria’s headline inflation slowed for the second consecutive month to 22.97% in May. This is down from 24.48% at the start of the year

This is contrary to the World Bank projection that Nigeria’s economy would record steady growth of 3.6% despite the shift in the global trade dynamics.

Joseph Ogebe, head of research and development at Nigerian Economic Summit Group (NESG), also said that global uncertainty had been very high in recent times, resulting from the Trump 2.0 effect.

“And also with the recent war between Israel and the international community, we’ve seen what’s happening to oil prices. Even with the call-off of the war, we’ve seen the effect on oil prices too, which has implications on the fiscal side. So it has implications for the general economy,” he said.

The head of research at NESG said that rather than focusing on just growth, what should be looked at is a strategy called growth with depth.

“Growth with depth means that your growth must be diversified, export-led, productive, and technologically driven,” he said.

Ogebe said that if the Government works towards adopting a strategy of growth with depth, there is a tendency for the government to move towards its goal of achieving a $1 trillion economy by 2030.

The report revealed that the country’s recent policy moves, including fuel subsidy removal, exchange rate unification, and tax reforms, reflect a commitment to long-term transformation.

However, it also pointed out that at about 13%, Nigeria’s tax-to-GDP ratio is among the lowest in West Africa, noting that fiscal reforms are urgent.


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TikTok Expands Mental Health Support, Unveils Digital Safety Tools in Africa

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TikTok has announced the expansion of its global mental health fund to Sub-Saharan Africa and introduced new digital safety tools aimed at improving well-being on the platform.

The announcement was made at the inaugural Digital Well-being Summit held in Johannesburg, South Africa, with participants including government officials, mental health experts, NGOs and industry leaders from several African countries.

As part of the initiative, three organisations—South African Depression and Anxiety Group (SADAG), Mentally Aware Nigeria Initiative (MANI), and Kenya’s Mental360—were named as the first African beneficiaries of the platform’s $2.3 million Mental Health Education Fund.

TikTok also introduced an in-app guided meditation feature called “Sleep Hours,” rolled out globally to support better nighttime routines for users. The tool is automatically enabled for users under 18 from 10 p.m., with optional use for older users.

According to the company, the move is part of its broader efforts to support mental health, reduce stigma, and increase access to reliable support services on its platform.

The platform is also expanding access to local in-app mental health helplines across Africa, following successful pilots in Europe. The helplines will offer expert support on issues such as self-harm, harassment, and suicidal ideation.

Additionally, TikTok unveiled its first set of Mental Health Ambassadors in Africa under its collaboration with the World Health Organization. The ambassadors include medical professionals from South Africa, Nigeria, and Kenya.

Valiant Richey, TikTok’s Global Head of Trust and Safety Outreach, said the company remained committed to creating a safe and supportive space for users across all regions.

The summit featured discussions on online safety, digital literacy, and access to professional mental health resources, with support from local partners such as Spectra.


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