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Crude Oil, Chemicals, Agriculture, Energy Transition, Biofuel, Renewables
January 19, 2025
HIGHLIGHTS
Other big oil producers already working with BRICS
Trump has threatened 100% tariffs on BRICS
Group struggling to grow non-dollar trade
Major African oil producer Nigeria has joined the BRICS partnership program, the foreign affairs ministry said in a statement Jan. 18, as BRICS aims to increase its role in global trade.
The announcement comes days before President-elect Donald Trump takes office on Jan. 20. Trump has threatened to impose 100% tariffs on the BRICS countries if they proceed with plans to de-dollarize trade and establish a common currency.
BRICS sees responding to dollar-dominance and Western sanctions as a major priority. It has also called for greater cooperation on energy security and climate issues.
Nigeria joins Belarus, Bolivia, Cuba, Kazakhstan, Malaysia, Thailand, Uganda and Uzbekistan in the partnership program, which launched in October 2024, the Brazilian government said in a Jan. 17 statement.
Brazil holds the rotating presidency of the group in 2025 and is set to hold a series of ministerial meetings and a full leaders' summit later this year.
BRICS' clout in commodities markets increased significantly in 2024 when Iran, the UAE, Egypt and Ethiopia joined Brazil, Russia, India, China and South Africa as full members. Officials from Saudi Arabia have taken part in meetings, but not confirmed membership. Indonesia joined as a full member of the group on Jan. 6.
Nigeria is a key voice in global energy markets through membership in OPEC and OPEC+, as well as the Gas Exporting Countries Forum. It produced 1.48 million b/d of crude in December, according to the Platts OPEC+ survey by S&P Global Commodity Insights.
In a statement confirming that it is joining BRICS as a partner, the foreign ministry said that "Nigeria is poised to leverage this platform to advance shared goals in trade and investment, energy security, infrastructure development, technology, and climate change."
Reducing dependence on Western financial institutions is another top BRICS priority. It is pushing to develop non-dollar trade, although this faces some significant barriers. Issues include exposure to currency exchange rate fluctuations, currency convertibility and which alternative currency to choose.
Trade cooperation is also complicated by significant differences in member countries' economies and existing international partnerships.
Even still, member countries have steadily announced plans to increase non-dollar trade, with China's renminbi emerging as the most promising alternative to the US dollar. There have also been calls to use the UAE's Dirham more widely in trade within the group.
For Russia, the importance of reducing its exposure to the US dollar has increased since it launched a full-scale invasion of Ukraine in February 2022. It has been preparing to be cut off from Western financial markets and the US dollar since 2014, when its initial invasion of Ukraine and annexation of Crimea triggered sanctions.
Fellow BRICS members India and China have played a significant role in Russian efforts to mitigate the impact of this on its economy, with crude exports to the two countries softening the blow of a massive fall in supplies to Europe.
These supplies are threatened by the latest punishing Western sanctions, however. The US added 180 new shadow tankers to its sanctions list on Jan. 10 as well as oil producers, traders, insurance companies and energy officials in a bid to disrupt Russian oil trade.
The move has helped to push oil prices above $80/b for the first time since early October 2024. Platts last assessed Dated Brent at $82.255/b on Jan. 17.
BRICS is pushing for a bigger role in global investment. It established the New Development Bank in 2015, aimed at directing resources for infrastructure and sustainable development projects in emerging markets and developing countries.
Russian President Vladimir Putin proposed creating a new BRICS investment platform, which would further support national economies and provide financial resources to developing countries.
He also called for closer cooperation on global trade disputes and ensuring fair competition at the last leaders' summit held in the Russian city of Kazan in October. He said that 34 countries are considering some form of cooperation with BRICS, which could further increase BRICS' influence on global energy markets.