The only thing more surprising than the comment from Ali Naimi, the Saudi oil minister, that the oil market is oversupplied, is how seriously the market appears to have taken it. The oil price has dipped sharply today, according to some at least, because of Naimi’s comments.
The evidence Naimi cites is that the Saudis cut output last month by some 800,000 barrels per day. Some of this may have come from reduced Japanese output, after the earthquake put many of its refineries out of action. But this demand is likely to return relatively soon – it certainly shouldn’t be viewed as gone from the market in the long term.
Oil traders will have one less thing to worry about if Nigerian president Goodluck Jonathan is confirmed on Monday as the clear winner of Saturday’s election.
While there will be claims of fraud, and there is often the risk of violence in a Nigerian election, the betting is that Jonathan can consolidate his victory and the country can now avoid prolonged political uncertainty.
As Bloomberg reported , the Independent National Electoral Commission said that with results for all 36 states released, Jonathan scored 22.5 million votes and won in 21 states, compared with 12.2 million for his closest rival, former military ruler Muhammadu Buhari, who won 12 states. Jonathan also met the constitutional hurdle of winning a quarter of the votes in two-thirds of the states for an outright victory.