Oil tanker market soars

As the cliché goes, “the tanker sector is on fire.” Charter hires have reached stratospheric levels on the back of longer voyages for crude oil and for refined products, as well as small and large gas carriers.

The team at Deutsche Bank - Amit Mehrotra and Charles Robertson, who has recently joined - put it nicely, “Looking ahead, we expect continued strength in the tanker segment into next year, especially in light of upcoming EU sanctions against Russian crude and refined oil products imports. We believe minimal fleet supply growth coupled with expanding ton-mile demand for tankers will result in stronger rates for coming quarters.”

An important index of tanker health is the Baltic Dirty Tanker Index (BTDI), which has surged from just under 1,500 points to over 1,800 points during October. Researchers at tanker broker Poten have pegged period hires for economical VLCCs at US$47,500 per day for one year, end 2023, and US$39,000 per day (end 2024) for two year periods. Spot hires for VLCC’s in the BTDI, for AG to Far East were estimated to be north of US$70,000 per day

The listed equities have responded in kind. International Seaways, which the Deutsche Bank analysts had placed a target of US$40 per share on around October 10, 2022, when they began coverage, has been a standout. With INSW having now reached above this target in less than three weeks after starting to follow it, the analysts have now moved the target up to US$50 per share, based on cash flow estimates for 2023- 2024 being revised upwards. Each new pricing pinnacle represents an all-time-high for the tanker owner, with its previous highs set in early 2020 at around US$30 per share.

Importantly, the Mehrotra/Robertson duo say, “We believe INSW shares are now trading above net asset value (NAV).” Other owners have also noted the owner’s strength. Besides a prescient investment in INSW by Frontline in late April, which has now nearly doubled in value, investors tied to insiders Ofer and Navig8 both took stakes during October.

The potential for dramatic increases in demand for handling Russian oil export oil movements is bolstering tanker optimism as origins and destinations begin a big pivot in the wake of sanctions, and, possibly, price caps on oil moving out of Russia.

One extreme trade-rearrangement boosting ton miles, cited by one news service contemplated that oil from eastern Russia was being supplanted, in the case of several cargoes recently fixed hauling Brazilian crude into China.

Once the sanctions begin, observers expect that what’s euphemistically known as the fleet of shadow tankers or dark tankers will haul at least a portion, but not all, of the Russian crude to buyers, complemented by owners staying out of the European Union trades.

Analysts at shipbroker Braemar who looked at projected export volumes against available Russian and Russian-trading tankers still came up with a deficit. Their calculations suggest a shortfall of 110 tankers (mainly Aframaxes and Suezmaxes) needed to haul Russian crude if volumes remain around 3.5 million barrels per day. Brokers Gibson, while not putting a number on needed vessels echoed a similar notion of a shortage, and, said that if the Russian trading fleet is undersupplied, which would drive increased S & P activity and potential support secondhand values even higher.

While the optimism is raging now savvy players are taking money off the table. Besides tanker owners entering into period charters to lock in the highs, at least one large INSW shareholder has been cashing out. Regulatory filings show that entities linked to Craig Stevenson, a Director of INSW, who headed up Diamond-S, which was merged into INSW last year, had sold a large block of owned shares though still maintaining a substantial holding. Stevenson was heading up the old OMI Corp, which sold its fleet for US$2.2 billion, divided between Teekay and Torm, in 2007, at the height of a previous tanker boom.

US oil production nears 12 million barrels/day

According to Reuters, oil production in the United States rose to nearly 12 million barrels per day (bpd) in August 2022, the highest since the onset of the COVID-19 pandemic; even as shale companies have said they do not see production accelerating in coming months.

US crude prices have hovered around US$85/barrel after surging into triple-digits this year and boosting fuel costs for consumers. President Joe Biden has called on oil companies to boost production to reduce fuel prices.

Overall US output peaked at 13 million bpd in late 2019, and has not returned to that level since the pandemic started as rigs have been shut in and as costs for equipment and labor increased rapidly.

Several US shale producers recently said well results are disappointing, and production is falling short of forecasts.

"You'll see production tick higher, but I don't think we're going to go ripping higher to 13.1 million barrels," said Bob Yawger, Director of Energy Futures at Mizuho in New York.

A little over two years after the pandemic wrecked havoc on demand and slashed profits, four of the five largest global oil companies brought in roughly US$50 billion in net income in the most recent quarter.

Most major oil majors and large, listed producers are focused on returning profits to shareholders through share buybacks and dividends.

US upstream oil companies are expected to bank a 68% increase in free cash flow per barrel in 2022, while output growth lingers at 4.5% year to date, Deloitte said last week.

Crude production rose 0.9% to 11.98 million bpd in August, highest since March 2020, the US Energy Information Administration (EIA) said in monthly figures.

Natural gas production in the United States hit another record, with gross output in the lower 48 states rising 0.6 billion cubic feet per day (bcfd) to 110.6 bcfd in August. That topped the prior all-time high of 110.0 bcfd in July.

In top oil producing states, monthly output rose 1.6% to 5.10 million bpd in Texas and 0.6% to a record 1.58 million bpd in New Mexico, but fell 0.5% to 1.06 million bpd in North Dakota. Texas's output is at a level not seen since April 2020.

In top gas producing states, monthly output rose 0.9% to a record 31.3 bcfd in Texas and fell 1.5% to 20.4 bcfd in Pennsylvania, lowest since November 2020.

 

 

Indian rupee marks biggest monthly losing streak since 1985

The Indian rupee has declined in each of the ten months this year to notch its biggest losing streak in almost four decades as the US Federal Reserve's hawkish stance on monetary policy catapulted the dollar to two-decade highs.

The dollar index is up 16% this year, having scaled 114.8 levels last month to trade near its 2002 peak. Its ascent has pressured currencies globally, especially ones in emerging Asian markets.

The Indian rupee fell 1.8% against the dollar in October, taking its slide for the year to nearly 11%.

Surging oil prices due to the Russia-Ukraine conflict and weakness in the Chinese yuan have only piled on more pressure on the rupee and helped send it to a record low of 83.29 per dollar earlier this month.

The rupee's losses have been deeper in the past two months, with market participants reckoning that the Reserve Bank of India let the currency slide after having helped hold it at the 79-80 levels for a long time.

Almost all traders and economists expect there will be no let-up in the pressure on the rupee for the rest of the year as the Fed stays on its aggressive rate-hike path after making fighting inflation its priority.

"This week, the Fed's upcoming meeting would be crucial for the rupee outlook. It could come under pressure in case Fed indicates aggressive tightening path in the future," HDFC Bank economists wrote in a note.

"Broadly, 81.80 to 82.00 seems a strong support zone for the USD/INR pair. As long as it trades above this convincingly, one can expect a U-turn towards 82.80 to 83.00 levels," said Amit Pabari, managing director at consultancy firm CR Forex Advisors.

Can Black Sea grain deal survive without Russia?

According to a Reuters report, United Nations, Turkey and Ukraine pressed ahead to implement a Black Sea grain deal and agreed on a transit plan for Monday for 16 vessels to move forward, despite Russia's withdrawal from the pact that has allowed the export of Ukrainian agricultural products to the world markets.

Russia, which invaded Ukraine on February 24 this year, on Saturday halted its role in the Black Sea deal for an indefinite term, cutting shipments from one of the world's top grain exporters, because it said it could not guarantee safety of civilian ships travelling under the pact after an attack on its Black Sea fleet.

The move has sparked an outcry from Ukraine, NATO, the European Union and the United States, while the United Nations and Turkey, two main brokers of the July deal, scrambled on Sunday to save it.

UN Secretary-General Antonio Guterres was deeply concerned about Russia's move and delayed a foreign trip to try and revive the agreement that was intended to ease a global food crisis, his spokesperson said.

Following Russia's move, Chicago wheat futures jumped more than 5% on Monday as both Russia and Ukraine are among the world's largest wheat exporters, analysts said.

More than 9.5 million tons corn, wheat, sunflower products, barley, rapeseed and soy have been exported since July. Under the deal, a Joint Coordination Centre (JCC) - made up of UN, Turkish, Russian and Ukrainian officials - agrees on the movement of ships and inspects the vessels.

No ships moved through the established maritime humanitarian corridor on Sunday. But the United Nations said in a statement that it had agreed with Ukraine and Turkey on a movement plan for 16 vessels on Monday - 12 outbound and 4 inbound.

It said the Russian officials at the JCC had been told about the plan, along with the intention to inspect 40 outbound vessels on Monday, and noted that "all participants coordinate with their respective military and other relevant authorities to ensure the safe passage of commercial vessels" under the deal.

During Sunday's session among the grain deal delegations, Russian officials said Moscow will continue the dialogue with the United Nations and the Turkish delegation on pressing issues, the UN said in its statement.

Turkish Defence Minister Hulusi Akar was in contact with his Russian and Ukrainian counterparts to try and salvage the agreement and had asked the parties to avoid any provocation, the Turkish defence ministry said.

NATO and the European Union have urged Russia to reconsider its decision. US President Joe Biden on Saturday called Russia's move purely outrageous and said it would increase starvation. US Secretary of State Antony Blinken accused Moscow of weaponizing food.

On Sunday, Russia's ambassador to Washington snapped back, saying the US response was outrageous and made false assertions about Moscow's move.

QatarEnergy keen in acquiring 30% stake in Lebanon offshore gas project

State-owned QatarEnergy is in talks with the Lebanese government to take a 30% stake in an offshore exploration block and is also negotiating with TotalEnergies and ENI on this matter, CEO Saad al-Kaabi confirmed on Sunday.

According to Reuters, TotalEnergies and the Lebanese government have reached a deal handing the French oil major temporary majority control of the block and paving the way for negotiations with Qatar over a stake in the gas project.

"We are in the process of discussing that with the government of Lebanon and the partners, Total and ENI for a participation of around 30% ownership of that exploration block," Kaabi said.

"In due course when we get that basically finalized as an agreement, and we sign that agreement, we will announce it."

The initial exploration license was held by a three-part consortium of TotalEnergies, Italy's Eni and Novatek. Beirut announced in September that Novatek, which held a 20% stake, would exit.

Lebanon's cabinet issued an unpublished decision on October 21, assigning Novatek's stake to a firm called Daja 216 and transferring TotalEnergies's 40% stake to another company, Daja 215. It is believed that Daja 215 and Daja 216 were TotalEnergies vehicles.

The sources had said that the understanding between TotalEnergies and Lebanon was that the French group would enter negotiations with QatarEnergy over the former Novatek stake. Qatar was seeking a 30% stake, comprised of Novatek's former stake and a 5% stake from each of TotalEnergies and Eni.

Offshore areas in the eastern Mediterranean and Levant have yielded major gas discoveries in the past decade. Interest in them has grown since Russia's invasion of Ukraine disrupted gas supplies.

 

Russia intends to suspend grain export deal

Russia expresses intent to suspend its participation in the agreement to ensure the continuation of Ukrainian grain exports — vital for food supplies to poor countries — linking the decision to a drone attack on Russian ships in occupied Crimea on Saturday morning. The Defense Ministry announced the move, and it was also reported by the state news agency TASS.

"Taking into account the terrorist act carried out by the Kiev regime with the participation of British experts against ships of the Black Sea fleet and civilian vessels involved in the security of grain corridors, Russia suspends its participation in the implementation of the agreement on exports of agricultural products from Ukrainian ports," the Russian Defense Ministry announced on Telegram.

The move comes a day after UN Secretary-General Antonio Guterres urged Russia and Ukraine to renew the deal that has seen more than nine million tons of grain exported from Ukraine and brought down global food prices.
The Ukrainian president's chief of staff, Andriy Yermak, accused Russia of blackmail and invented terror attacks on its own territory — an apparent response to Russian accusations that Ukraine was behind the blasts.

An adviser to Ukraine's Interior Ministry, Anton Gerashchenko, claimed in his Telegram channel that "careless handling of explosives" in occupied Crimea led to explosions aboard four warships belonging to Russia's Black Sea Fleet.

Regarding the UK, the Russian Defense Ministry also blamed British specialists based in Ochakov, Mykolaiv region for preparing a terrorist act and training Ukrainian military personnel.

It also said British navy personnel blew up the Nord Stream gas pipelines last month, without providing any evidence. Britain's Defense Ministry said the Russian claims were false and designed to distract from Russian military failures in Ukraine.

Lebanon plunging into constitutional chaos

Outgoing Lebanese President Michel Aoun told Reuters on Saturday his nation could be sliding into constitutional chaos, with an unprecedented situation of having no one in line to succeed him and a cabinet that is operating in a caretaker capacity.

Aoun is set to leave the presidential palace on Sunday, a day before his six-year term ends, but four sessions in the nation's fractured parliament have failed to reach consensus on a candidate to succeed him.

Aoun said in an interview an 11th-hour political move to address the constitutional crisis might be possible, but added there is no final decision on what that could involve.

Aoun's presidency is inextricably linked in the minds of many Lebanese to their country's worst days since the 1975-1990 civil war, with the financial crisis that began in 2019 and the deadly Beirut port blast of 2020.

In the days after the blast, Aoun said he had received a report about the roughly 2,700 tons of ammonium nitrate stored at the port of Beirut weeks before they detonated and killed some 220 people.

Aoun's son-in-law Gebran Bassil, who was put on a sanctions list by the United States in 2020 for alleged corruption, has presidential ambitions, according to political sources.

Bassil has denied the allegations of corruption, and Aoun said on Saturday the sanctions would not stop Bassil from eventually being a presidential candidate.

Once he's elected president, the sanctions will go away, Aoun said, without elaborating.

In his final week as President, Aoun signed a US-brokered deal delineating Lebanon's southern maritime border with Israel - a modest diplomatic breakthrough that would allow both countries to extract natural gas from maritime deposits.

He said powerful Iran-backed armed group Hezbollah, which sent unarmed drones over Israel and threatened to attack its offshore rigs multiple times, had served as a deterrent that had helped keep the negotiations going in Lebanon's favour.

"It wasn't coordinated (with the government). It was an initiative taken by Hezbollah and it was useful," Aoun said, adding that the Lebanese army "had no role" in this regard.

He said the deal paved the way for gas discoveries that could be Lebanon's last chance at recovering from a three-year financial meltdown that has cost the currency 95% of its value and pushed 80% of the population into poverty.

Lebanon has otherwise made slow progress on a checklist of reforms required to gain access to US$3 billion in financing from the International Monetary Fund.

Aoun said he would stay involved in politics in Lebanon even after he leaves office, particularly to fight Central Bank governor Riad Salameh, one of the president's main political adversaries.

Salameh is being investigated in Lebanon and at least five countries abroad on charges of corruption and embezzlement of public funds, charges he denies.

 

 

 

 

Iran denies supplying arms to Russia

Iran has maintained its active neutrality in the Ukraine war and has never given weapons to the two sides of the war, Iran’s ambassador and permanent representative to the United Nations said on Thursday.

Amir Saeed Iravani said Iran has been insisting on an immediate end to the war in Ukraine, and despite bilateral defense cooperation with Russia, Tehran has never given weapons to the warring parties for use in the war in Ukraine before or after the conflict.

Speaking at the UN Security Council meeting, he refuted claims by Western countries on alleged use of Iranian drones in the war in Ukraine and attempts to link it with UN Security Council Resolution 2231 on the nuclear agreement.

“A number of members of the United Nations Security Council, including the United States, have accused other countries of violating UNSCR 2231, while they themselves continue to violate all legal obligations under the same resolution.

A clear example of this breach of commitment is the illegal withdrawal of the United States from the 2015 nuclear deal and the continuation of this breach of obligations now as leverage for bargaining.

An action that is considered a clear and flagrant violation of the mandatory rules of international law, the United Nations Charter and Security Council Resolution 2231,” the diplomat stated.

In another move, Iravani pointed out, Western countries have tried to present false, misleading, arbitrary and incomplete interpretations of Resolution 2231.

“They made a false connection between this resolution and the use of drones in the conflict in Ukraine in order to justify their baseless claims against the Islamic Republic of Iran,” the ambassador stated.

He added that the claim of violation of Paragraph 4 of Appendix B of Resolution 2231 is a mistake and a misleading and arbitrary interpretation, which is considered to be in contradiction with the provisions, spirit and text of this paragraph.

“This paragraph clearly refers to the limitations of items, materials, equipment, goods and technology that could contribute to the development related to nuclear weapons, in which Iran has never produced or supplied these items and has no intention to produce them,” Iravani underlined.

Regarding the request submitted to the UN Secretariat to conduct an investigation within the framework of Resolution 2231 to evaluate the type of drones used in the conflict in Ukraine, the ambassador stressed the resolution has not provided any legal basis for conducting such investigations.

“In addition, and more importantly, the memorandum dated January 16, 2016 by the head of the Security Council has specified the duties related to the implementation of the resolution, especially in relation to the principles mentioned in paragraph 2 and 7 of Appendix B of this resolution. The Secretariat has duties regarding this resolution including managing all incoming and outgoing communications related to the implementation of the resolution, drafting correspondence, speeches and justifying the facilitator related to the implementation of the resolution, maintaining all information and documents related to the work of the Security Council,” he added.

Ambassador Iravani further warned any misuse of the duties mentioned in Resolution 2231, saying the requested investigation is illegal and is considered a clear violation of the Secretariat's agenda.

“Mr. President, I want to emphasize once again Iran's clear and consistent position regarding the situation in Ukraine. Since the beginning of the war in Ukraine, Iran has adopted and maintained a position of active neutrality. Our country emphasizes that all members of the United Nations must fully respect the goals and principles contained in the United Nations Charter and international law, including sovereignty, independence, unity and territorial integrity,” the diplomat said.

He concluded his remarks by saying, “Beyond the legal and political position, Iran believes from a moral point of view that the supply of military weapons cannot help end the war and will escalate the war and increase the injuries and destructions and cause the suffering and pain of the civilians. This is the reason why Iran has asked the parties to fulfill their obligations under international humanitarian law and conduct consultations to protect citizens and vital infrastructures against military attacks.”

 

Iran Pakistan private sectors ink MoUs

Iran Chamber of Commerce, Industries, Mines and Agriculture (ICCIMA) and Federation of Pakistan Chambers of Commerce and Industries (FPCCI) have signed three memorandum of understanding (MoU) with the aim of expanding economic cooperation between the private sectors of the two countries.

The MOUs were signed during a visit of an Iranian private sector delegation headed by ICCIMA Head Gholam-Hossein Shafeie to the Pakistani cities of Karachi and Lahore.

Based on the signed memorandums, the two sides agreed to strengthen comprehensive cooperation between the private sectors of the two countries, to establish a joint trade council of Iran and Pakistan, and to determine a mechanism to resolve trade disputes.

Accordingly, the Iran-Pakistan Joint Trade Council will work together with the Iran-Pakistan Joint Chamber of Commerce to strengthen economic relations between the two neighbors.

ICCIMA and FPCCI will also resolve the trade disputes between businessmen and traders through a channel separated from the two countries’ legal systems.

During their visit to Pakistan, the Iranian delegates attended a meeting with officials from the State Bank of Pakistan in which the two sides discussed details of a barter trade mechanism between the two countries.

The Zahedan Chamber of Commerce from Iran and the Quetta Chamber of Commerce and Industries (QCCI) from Pakistan have been put in charge as coordinators for implementing and pursuing the barter trade mechanism between the two sides.

As reported, at the end of the meeting the two sides agreed to form a 10-member committee to work on the details of the mechanism and follow up on the related issues in the future.

Solving currency and customs issues for the easy passage of transit trucks and accelerating the implementation of the free trade agreement between Iran and Pakistan, along with using Iran's membership status in the Eurasian Economic Union (EAEU) and the Shanghai Cooperation Organization (SCO), were also among the issues that were discussed in this meeting.

Details of the barter trade mechanism were also discussed in another meeting with the members of the Karachi Chamber of Commerce and Industries (KCCI) on Thursday.

Speaking in this meeting, KCCI Head Mohammad Tariq Yousuf mentioned the unsatisfactory level of trade between the two countries and noted that the barter trade agreement would open new windows for the expansion of trade ties between the two sides.

Shafeie for his part mentioned Karachi as the economic capital of Pakistan, saying that despite the significant capacities on both sides, the level of commercial relations between the two countries is still very limited.

During their stay in Pakistan, the 26-member Iranian delegation, comprised of the head of the Iran-Pakistan Joint Chamber of commerce, the heads of the three provincial chambers of Isfahan, Zanjan, and Zahedan, the secretary general of the ECO chamber of commerce, and four MPs, visited the cities of Karachi and Lahore.

Promoting bilateral trade to five billion dollars is said to be among the main objectives of this visit.

 

Putin criticizes West over Ukraine war

Russian President Vladimir Putin is showing no regrets for the war against neighbour Ukraine, insisting it is going according to plan and playing down any nuclear standoff with the West.

Putin, in remarks at a conference in Moscow on Thursday, had a familiar litany of grievances against our Western opponents and said the West's dominance over world affairs was coming to an end.

Putin accused the West of inciting the war in Ukraine and of playing a dangerous, bloody and dirty game that was sowing chaos across the world. Putin said, the West would have to talk to Russia and other major powers about the future of the world.

"We are standing at a historical frontier, ahead is probably the most dangerous, unpredictable and, at the same time, important decade since the end of World War Two," Putin said at an annual foreign policy conference.

The conflict, which began eight months ago with an invasion by Russian forces of neighbouring Ukraine, has killed thousands, displaced millions, shaken the global economy and reopened Cold War-era divisions.

Asked at the conference whether there had been any disappointments in the past year, Putin answered simply: "No", though he also said he always thinks about the Russian lives lost in Ukraine.

In response to questions, Putin made no mention of Russia's battlefield setbacks in recent months and said Russian aims had not changed.

Russia was fighting to protect the people of the Donbas, he said, referring to an eastern industrial region that comprises two of the four Ukrainian provinces he proclaimed annexed last month.

Fighting on the ground appears to have slowed in recent days, with Ukrainian officials saying tough terrain and bad weather had held up their main advance in Kherson.

On Thursday a close ally of Putin, Chechen leader Ramzan Kadyrov, said 23 of his soldiers had been killed and 58 others wounded in a Ukrainian artillery attack this week in Kherson. After the attack, Chechen forces killed about 70 Ukrainians, he said.

Russian forces shelled Ukrainian positions along the entire line of contact and built fortifications, particularly on the east bank of the Dnipro River, the General Staff of the Ukrainian Armed Forces said in a Facebook post on Thursday evening.

Indian oil imports from Middle East fell to 19 month low

Indian oil imports from the Middle East fell to a 19-month low in September, while Russian imports rebounded although refining outages hit overall crude imports.

Iraq remained the top supplier while Russia overtook Saudi Arabia as the second biggest after a gap of a month.

Indian total oil imports in September fell to a 14-month low of 3.91 million barrels per day (bpd), down 5.6% from a year earlier, due to maintenance at refiners such as Reliance Industries and Indian Oil Corp.

Indian imports from the Middle East fell to about 2.2 million bpd, down 16.2% from August, while imports from Russia increased 4.6% to about 896,000 bpd after dipping in the previous two months.

Russia's share of India's oil imports surged to an all-time high of 23% from 19% the previous month while that of the Middle East declined to 56.4% from 59%, the data showed.

The share of Caspian Sea oil, mainly from Kazakhstan, Russia and Azerbaijan, rose to 28% from 24.6%.

India has emerged as Russia's second biggest oil buyer after China, taking advantage of discounted prices as some Western entities shun purchases over Moscow's invasion of Ukraine.

"The discount on Russian oil has narrowed now but when you compare its landed cost with other grades such as those from the Middle East, Russian oil turned out to be cheaper," said a source at one of India's state refiners.

Imports for Saudi Arabia fell to a three-month low of about 758,000 bpd, down 12.3% from August, while imports from Iraq plunged to 948,400 bpd, their lowest level in a year, the data showed.

Imports from the United Arab Emirates declined to a 16-month low of about 262,000 bpd.

Higher intake of Caspian Sea oil has hit the share of other regions in India's imports in April-September, the first half of the fiscal year, and also cut OPEC's market share in the world's third biggest oil importer and consumer to its lowest ever.

In the first half of this fiscal year, Indian refiners also reduced purchases of African oil, mostly bought from the spot market. However, supply from the Middle East rose from a low base last year when the second wave of the coronavirus cut fuel demand.

 

 

Islamic State claims Iran shrine attack

The Islamic State claims carrying out attack on a Shi'ite Muslim shrine in Iran on Wednesday which killed 15 people, escalating tensions in a country reeling from a wave of protests, reports Reuters.

Iranian officials said they had arrested a gunman who carried out the attack at the Shah Cheragh shrine in the city of Shiraz. State media blamed takfiri terrorists - a label Tehran uses for hardline Sunni Muslim militants like Islamic State.

The group has claimed previous attacks in Iran, including deadly twin bombings in 2017 which targeted Iran's parliament and the tomb of the Islamic Republic's founder Ayatollah Ruhollah Khomeini.

Wednesday's killing of Shi'ite pilgrims came on the same day that Iranian security forces clashed with increasingly strident protesters marking the 40-day anniversary since the death in police custody of Mahsa Amini, a 22-year-old Kurdish woman.

Interior Minister Ahmad Vahidi blamed the protests sweeping Iran for paving the ground for the Shiraz attack, and President Ebrahim Raisi said Iran would respond, according.

"Experience shows that Iran's enemies, after failing to create a split in the nation's united ranks, take revenge through violence and terror," said Raisi, speaking before Islamic State released its claim of responsibility.

"This crime will definitely not go unanswered, and the security and law enforcement forces will teach a lesson to those who designed and carried out the attack."

The semi-official Tasnim news agency said the attacker shot an employee at the shrine entrance before his rifle jammed and he was chased by bystanders.

He managed to fix his gun and opened fire on his pursuers, before entering a courtyard and shooting worshippers. Several women and children were among the dead, it said.

 

Oil isn’t the reason for US-Saudi rift

Saudi Arabia decided to be the mature guys in a spat with the United States over oil supplies, the Kingdom's energy minister Prince Abdulaziz bin Salman said on Tuesday.

The decision by the OPEC Plus oil producer group led by Saudi Arabia this month to cut oil output targets unleashed a war of words between the White House and Riyadh ahead of the kingdom's Future Investment Initiative (FII) forum, which drew top US business executives.

The two traditional allies' relationship had already been strained by the Joe Biden administration's stance on the 2018 murder of Saudi journalist Jamal Khashoggi and the Yemen war, as well as Riyadh's growing ties with China and Russia.

When asked at the FII forum how the energy relationship with the United States could be put back on track after the cuts and with the December 05, 2022 deadline for the expected price-cap on Russian oil, the Saudi energy minister said: "I think we as Saudi Arabia decided to be the mature guys and let the dice fall".

"We keep hearing you 'are with us or against us', is there any room for 'we are with the people of Saudi Arabia'?"

Saudi Investment Minister Khalid al-Falih said earlier that Riyadh and Washington will get over their unwarranted spat, highlighting long-standing corporate and institutional ties.

"If you look at the relationship with the people side, the corporate side, the education system, you look at our institutions working together we are very close and we will get over this recent spat that I think was unwarranted," he said.

While noting that Saudi Arabia and the United States were solid allies in the long term, he highlighted the kingdom was very strong with Asian partners including China, which is the biggest importer of Saudi hydrocarbons.

The OPEC Plus cut has raised concerns in Washington about the possibility of higher gasoline prices ahead of the November US midterm elections, with the Democrats trying to retain their control of the House of Representatives and the Senate.

Biden pledged that there will be consequences for US relations with Saudi Arabia after the OPEC Plus move.

Princess Reema bint Bandar Al Saud, the kingdom's ambassador to Washington, said in a CNN interview that Saudi Arabia was not siding with Russia and engages with everybody across the board.

"And by the way, it's okay to disagree. We've disagreed in the past, and we've agreed in the past, but the important thing is recognizing the value of this relationship," she said.

She added, "A lot of people talk about reforming or reviewing the relationship" and said it was a positive thing as Saudi Arabia is not the kingdom it was five years ago.

Like previous years, the FII three-day forum that opened on Tuesday saw a big turnout from Wall Street, as well as other industries with strategic interests in Saudi Arabia, the world's top oil exporter.

JPMorgan Chase & Co Chief Executive Jamie Dimon, speaking at the gathering, voiced confidence that Saudi Arabia and the United States would safeguard their 75-year-old alliance.

"I can't imagine any allies agreeing on everything and not having problems – they’ll work it through," Dimon said. "I'm comfortable that folks on both sides are working through and that these countries will remain allies going forward, and hopefully help the world develop and grow properly."

The FII is a showcase for the Saudi crown prince's Vision 2030 development plan to wean the economy off oil by creating new industries that also generate jobs for millions of Saudis, and to lure foreign capital and talent.

No Biden administration officials were visible at the forum on Tuesday. Jared Kushner, a former senior aide to then-President Donald Trump who enjoyed good ties with Prince Mohammed, was featured as a front-row speaker.

The Saudi government invested US$2 billion with a firm incorporated by Kushner after Trump left office.

FII organizers said this year's edition attracted 7,000 delegates compared with 4,000 last year.

 

Energy market should be depoliticized, says Iranian Oil Minister

Energy market should be depoliticized, says Iranian Oil MinisterIranian Oil Minister Javad Oji said sanctioning the owners of the world’s biggest gas reserves will have devastating consequences for the environment, stressing that the global energy market should be depoliticized.

GECF Members account for 43% of the world's gas production and own 72% of the world's gas reserves; 55% of the gas transmission by pipeline and 50% of the liquefied natural gas (LNG) trade is also carried out by GECF member states.

 “Using energy as a political tool and sanctioning the most important owners of natural gas reserves will have irreparable consequences on the world’s environment and will make it impossible to achieve the United Nations’ sustainable development goals,” said Oji, addressing the 24th Ministerial Meeting of the Gas Exporting Countries Forum (GECF) in Cairo, Egypt.

“I believe that the realization of a global ecosystem with zero carbon emission will remain only a slogan without political will, financial resources, investment in infrastructure, and serious scientific and technological cooperation of all nations,” he said.

Underlining the important role of natural gas in the world’s energy transition, the official stated that the members of the GECF assembly should put new policies on the agenda to promote and facilitate natural gas consumption.

Oji further emphasized the need to pay more attention to environmental issues, saying, “As a person who has worked in engineering and management activities in Iran's gas sector for many years, I believe reducing carbon emissions and protecting the environment is possible considering the existing technical and engineering capabilities.”

Emphasizing that it is necessary for developing and developed countries to pay serious attention to new technologies in various fields such as carbon absorption, utilization, and storage of natural gas, and reducing the leakage of methane or blue hydrogen, he added, “Fortunately, new technologies for reducing the carbon emission in the natural gas production process are widely available if there is the political will to do so.”

The official finally stressed the need for improving the GECF status in the global gas market for ensuring the world's energy security, saying, “I suggest that joint thinking and construction cooperation among the members of the assembly should be promoted at strategic, managerial and technical levels.”

“I believe that the exchange of successful experiences among member countries at the mentioned levels is very important,” he added.

The ministerial meeting is the highest governing body of the forum, and according to the GECF statute, it is held once a year.

Algeria, Bolivia, Egypt, Equatorial Guinea, Iran, Libya, Nigeria, Qatar, Russia, Trinidad and Tobago, and Venezuela are 11 main members of GECF, and Malaysia, Norway, Iraq, Peru, Azerbaijan, UAE, and Mozambique are observer members in the forum.

 

Rishi Sunak faces huge task as Prime Minister

Rishi Sunak became Britain's third prime minister in two months on Tuesday, tasked with tackling a mounting economic crisis, a warring political party and a deeply divided country in one of the greatest challenges to confront any new leader.

The 42-year-old former hedge fund boss was asked to form a government by King Charles, and will seek to bring an end to the infighting and feuding at Westminster that has horrified investors and alarmed international allies.

Sunak, one of the richest men in parliament, will have to find deep spending cuts to plug an estimated 40 billion pound ($45 billion) hole in the public finances due to an economic slowdown, higher borrowing costs and a six-month program of support for people's energy bills.

With his party's popularity in freefall, Sunak will also face growing calls for an election if he moves too far from the policy manifesto that elected the Conservative Party in 2019, when then leader Boris Johnson pledged to invest heavily in the country.

Economists and investors have said Sunak's appointment will calm markets, but they warn that he has few easy options when millions are battling a cost of living crunch.

"With a recession in 2023 now increasingly likely, and the next general election in only two years' time, Rishi Sunak can expect a challenging premiership," Eiko Sievert at the Scope ratings agency told Reuters.

Sunak has warned his colleagues they face an "existential crisis" if they do not help to steer the country through the surging inflation and record energy bills that are forcing many households and businesses to cut back spending.

"We now need stability and unity, and I will make it my utmost priority to bring our party and our country together," he said as he was elected by his lawmakers on Monday.

Sunak, Britain's youngest prime minister for more than 200 years and its first leader of colour, replaced Liz Truss who resigned after 44 days following a "mini budget" that sparked turmoil in financial markets.

With debt interest costs rising and the outlook for the economy deteriorating, he will now need to review all spending, including on politically sensitive areas such as health, education, defence, welfare and pensions.

Reflecting the near constant state of turmoil in British politics this year, politicians, journalists and photographers once again crammed into Downing Street on Tuesday to hear a departing speech from Truss.

Speaking seven weeks to the day after she arrived as prime minister, Truss did not apologize for her short tenure and said she knew Britain was set for brighter days.

During her time in office the pound hit a record low against the dollar, borrowing costs and mortgage rates surged, and the Bank of England was forced to intervene to protect pension funds from collapsing.

Sunak will now start forming his cabinet, with some Conservative lawmakers hoping he will include politicians from all wings of the party.

He is expected to retain Jeremy Hunt as finance minister after the former foreign and health secretary helped calm volatile bond markets by ripping up most of Truss's economic program.

Investors will also want to know if Sunak still plans to publish a new budget alongside borrowing and growth forecasts on October 31, 2022 which would help inform the Bank of England's interest rate decision on November 03, 2022.

Sunak, a Goldman Sachs analyst who only entered parliament in 2015, must unite his party, aware that voters are increasingly angry over the antics at Westminster as the economy heads for recession.

He was blamed by many in the party when he quit as finance minister in the summer, triggering a wider rebellion that brought down Johnson.

While many expressed relief that the party settled on a new leader quickly, a sense of distrust remains among some while others questioned whether struggling families would relate, or ever vote, for a multimillionaire.

"I think this decision sinks us as a party for the next election," one Conservative lawmaker told Reuters on condition of anonymity.

Historian and political biographer Anthony Seldon told Reuters that Sunak would also be constrained by the mistakes of his predecessor.

"There is no leeway on him being anything other than extraordinarily conservative and cautious," he said.

Many politicians and officials abroad, having watched as a country once seen as a pillar of economic and political stability descended into brutal infighting, welcomed Sunak's appointment.

Sunak becomes Britain's first prime minister of Indian origin.

 

Nord Stream owners in insurance limbo

With the mystery of the blasts that destroyed undersea gas pipelines between Russia and Germany unsolved, insurers and reinsurers of Nord Stream 1 are grappling with how to respond to hundreds of millions of dollars in potential claims.

Munich Re and syndicates within the Lloyd's of London market are among the major underwriters for Nord Stream 1. Industry sources with knowledge of the situation said, it was unclear whether they would renew its cover.

If the insurance is not renewed, the prospect of the pipeline bringing gas to Europe under the Baltic Sea ever being repaired and restarted becomes more remote.

Even before leaks were found, supplies via Nord Stream 1 had been halted as a result of a dispute over Western sanctions on Russia, while the newly-built Nord Stream 2 pipeline had not started commercial deliveries.

While a claim has not yet been made for the damage and disruption to the pipeline, two of the sources told Reuters, Nord Stream 1 underwriters may dispute any submitted on the grounds that the damage was an act of self-sabotage, or of war, neither of which are generally covered by insurance.

Amid speculation as to who was behind alleged sabotage that severed the pipelines at the centre of an energy crisis prompted by Russia's invasion of Ukraine, Danish police said on October 18, 2022 that the damage to Nord Stream 1 was caused by powerful blasts.

While damage itself would not necessarily affect the renewal of a property policy, insurers might ask for more premium, said Tim Shepherd, a litigation partner at Mayer Brown.

For the underwriters of the pipeline system, which Nord Stream's website says was built with 7.8 billion euros (US$7.6 billion) of investment, the stakes are high.

"Even if you are taking a small size (of cover), it is a big risk," one of the four industry sources said.

"The issue is going to be what happens if you can't prove it is a state sponsor (responsible for the blasts), you end up with a massive claim for damage," the source added.

Nord Stream 1 majority shareholder with a 51% stake is a subsidiary of Russian energy group Gazprom, which is subject to sanctions by the United States, Britain and Canada as well as some European Union restrictions.

Two of the sources said renewal of Nord Stream 1 cover by the Lloyd's syndicates would be challenging given the risk of tighter sanctions on Gazprom, which would prevent paying claims.

German energy groups Wintershall and E.ON, meanwhile, hold 15.5% each. Wintershall did not immediately respond to a request for comment.

An E.ON spokesperson said Nord Stream 1 operating company was responsible for operational issues, including insurance.

"Nord Stream AG remains in close contact with relevant authorities on the recent incident. Due to prevailing uncertainties, we as a shareholder continuously monitor developments and are in close contact with the other relevant stakeholders," the spokesperson said.

Gazprom and Swiss-based Nord Stream AG, did not respond to requests for comment, while French energy provider ENGIE, which has a 9% stake, declined to comment.

Dutch natural gas infrastructure company N.V. Nederlandse Gasunie, which also has a 9% stake, said it would assess the situation as soon as there was more clarity.

"The exact extent of the damage and possible follow-up actions can only be determined after inspection of the pipelines and that is not yet possible at this moment," Gasunie said.

"We are in close contact with our European partners and the relevant government authorities," it added.

Nord Stream's insurers will have to prove that its policy does not cover the damage caused by the blasts in order to avoid paying out on any claim, lawyers said.

Although property policies typically exclude malicious damage, policy holders often buy extra cover, which is likely in Nord Stream's case, legal and insurance sources said.

Russian President Vladimir Putin has said the United States and its allies blew up the pipelines, an allegation that has been dismissed by the White House. US President Joe Biden has said damage to Nord Stream was a deliberate act of sabotage.

The West has not directly pointed the finger at Moscow, which has denied any involvement.

French President Emmanuel Macron said earlier that Nordic leaders had told their European partners it was still impossible to say at this stage who was behind the damage.

If a Western state actor was found to be responsible, the damage might be designated as an act of terror, which one broking source said might be covered by insurance.

However, if investigations found Russia to have been involved, insurers could argue it was an act of "self-sabotage", given Gazprom is owned by the state.

"If there was a deliberate act by the policyholder, you are not going to have a covered claim," said David Pryce, managing partner at Fenchurch Law, which is not involved with the policy.

If there was any Russian involvement it could also mean the Nord Stream 1 damage being designated as an act of war, something that is typically excluded by insurance policies.

 

Ship survives drone attacks at Yemeni port

According to Seatrade Maritime News, Yemen’s Houthi militia has issued a warning to tankers loading at Yemeni oil terminals firing two armed drones at a Okeanis Eco Tankers VLCC as the vessel called for loading at the Al-Dabba oil terminal in Ash Shihr, Yemen. 

In a filing to the Oslo Stock Exchange, the Alafouzos-controlled company confirmed two “drone-driven explosions” in close proximity to its 300,000dwt newbuilding Nissos Kea on October 21, 2022.

The Greek owner of the Marshall Islands-flagged 2022-built tanker said it sustained no damage and no injuries to the crew in the attack which saw one drone explode ahead of it and another on its starboard side and came 14 minutes apart.

The Nissos Kea was scheduled to load 2 millio barrels of crude, but the vessel sailed from the loading port in international waters following the incident. “All necessary precautionary measures were duly taken beforehand and during the incident,” said Okeanis Eco Tankers.

The drone attack came two weeks after a cease-fire in the country’s civil war ended. Yemen’s Houthi militias said they were behind the attack, calling it a “warning strike.” to prevent pro-government forces from using terminals for oil exports. Meanwhile, the country’s Saudi-backed government said its forces had intercepted the drones.

The European Union (EU) said the flagrant menacing of international maritime commerce was unacceptable. “Houthi attacks on international shipping are an affront to core principles of the Law of the Sea, jeopardizing freedom of navigation through the region’s waterways and blocking access to Yemeni ports,” it added.

Cyprus-based, maritime security company Diaplous Group said: “The Company immediately emailed the Coast Guard to report the incident and request to stop. The coastguard warned that the vessel was in danger and prompted the master to abandon the operations at the terminal, to evacuate the area instantly and to inform accordingly when the vessel would be sailing in international waters.

Will Rishi Sunak be next Prime Minister of Britain?

Rishi Sunak looked set to become next Prime Minister of Britain after Boris Johnson withdrew from the contest on Sunday. Although he enjoys enough support to make the final ballot he realizes the country and the Conservative Party needed unity.

If chosen, Sunak would be the first prime minister of Indian origin in the United Kingdom.

Johnson had raced home from a holiday in the Caribbean to try and secure the backing of 100 lawmakers to enter Monday's contest to replace Liz Truss, the woman who succeeded him in September after he was forced to quit over a string of scandals.

He said he had secured the backing of 102 lawmakers and could have been "back in Downing Street", but that he had failed to persuade either Sunak, or the other contender Penny Mordaunt, to come together "in the national interest".

"I believe I have much to offer but I am afraid that this is simply not the right time," Johnson said late on Sunday.

The former prime minister had secured the public backing of just under 60 Conservative lawmakers by Sunday, well under half of the nearly 150 endorsements Sunak had received.

Johnson's statement likely paves the way for his arch rival, the 42-year-old former finance minister Sunak, to become prime minister, possibly as soon as Monday. If confirmed, he would replace Truss who was forced to resign after she launched an economic program that triggered turmoil on financial markets.

According to the rules, if only one candidate secures the backing of 100 Conservative lawmakers, they will be named prime minister on Monday.

If two candidates pass the threshold, they will go forward to a vote of the party membership, with the winner announced on Friday, just days before new finance minister Jeremy Hunt lays bare the state of the country's finances in a budget plan due to be released on October 31, 2022.

That had raised concerns that Johnson would return to Downing Street with the backing of the party members, and not a majority of lawmakers in parliament, leaving the party badly divided. Hunt declared his backing for Sunak late on Sunday.

Some Johnson supporters could switch to Mordaunt, who has presented herself as the unity candidate, but many immediately switched to Sunak. A source close to the Mordaunt campaign said the former defence minister would continue in the contest.

"She is the unifying candidate who is most likely to keep the wings of the Conservative Party together," the source said.

Johnson has loomed large over British politics ever since he became mayor of London in 2008 and went on to become the face of the Brexit vote in 2016. While he led the Conservative Party to a landslide election in 2019, he was forced out just three years later by a rebellion of his ministers.

Sunak said he hoped Johnson would continue to contribute to public life "at home and abroad".

One Sunak supporter, who asked not to be named, said his main reaction was relief because if Johnson had won the "party would have torn itself apart".

Another Conservative lawmaker Lucy Allan said on Twitter: "I backed Boris for PM, but I think he has done the right thing for the country."

Other Johnson backers immediately jumped ship.

Cabinet office minister Nadhim Zahawi, who minutes earlier had published an article on the Daily Telegraph website praising Johnson, said "a day is a long time in politics".

"Rishi is immensely talented, will command a strong majority in the parliamentary Conservative Party, and will have my full support and loyalty," he said.

Earlier, many of the Conservative lawmakers who normally back Johnson switched their support to Sunak, saying the country needed a period of stability after months of turmoil that has sparked headlines - and raised alarm - around the world.

Johnson is also still facing a privileges committee investigation into whether he misled parliament over Downing Street parties during COVID-19 lockdowns. He could be forced to resign or be suspended from office if found guilty.

Sunak first came to national attention when, aged 39, he became finance minister under Johnson just as the COVID-19 pandemic arrived in Britain, developing a furlough scheme to support millions of people through multiple lockdowns.

"I served as your chancellor, helping to steer our economy through the toughest of times," Sunak said in a statement on Sunday. "The challenges we face now are even greater. But the opportunities - if we make the right choice - are phenomenal."

His family migrated to Britain in the 1960s, a period when many people from Britain's former colonies arrived to help rebuild the country after the Second World War.

After graduating from Oxford University, he later went to Stanford University where he met his wife Akshata Murthy, whose father is Indian billionaire N. R. Narayana Murthy, founder of outsourcing giant Infosys Ltd.

 

Israel claims curbing Iran’s ability to transfer weapons to Syria

The Israeli military has destroyed about 90% of Iran's military infrastructure and attempts to entrench itself - with Hezbollah - in Syria, top officials in the defense establishment claimed over the weekend.

According to the officials, Israel has in recent years succeeded in almost completely curbing Iran's ability to transfer weapons to Syria, to manufacture weapons on the country's soil and to establish a base in it with pro-Iranian forces.

According to the sources, the plan of the former commander of the Iranian Quds Force, Qassem Soleimani, who was killed by the Americans in 2020, has failed due to the IDF’s continued air campaign against the forces in Syria.

The last alleged attack attributed to Israel in Syria was Friday when local media reported that the IDF attacked near the airport in Damascus after about a month of relative silence.

The sources said that despite the tension between Israel and Russia – which recently threatened Jerusalem not to transfer arms to Ukraine - the deconfliction mechanism to prevent Russian-Israeli friction in Syria is working as usual.

Periods without attacks, the sources said, are usually the result of an Iranian decision to suspend the smuggling of weapons to Syria, in order to try and find a new route to trick Israel.

The security officials emphasized that the IDF severely damaged Iran's smuggling routes from the sea, from the air and even from the land from Iran to Syria.

As a result of the attacks, the ability of the Syrian army to produce weapons and ammunition has also been damaged since the Iranians and Hezbollah used the same factories for the production of their weapons.

The focus of the attacks in recent years has also been to stop the smuggling of components for CERS – the Centre D’Etudes et de Recherches Scientifiques (CERS) in Masyaf that is used by Iran to produce advanced missiles and weapons for its proxies.

Along with this, the assessment in Israel is that Syrian President Bashar Assad has reduced the activity of Iran and Hezbollah in his country, with an emphasis on the Syrian Golan Heights and the south of the country.

According to sources in Israel, Assad has realized that in the coming years he will not be able to regain territories occupied by the Kurds, including the Turks, and instead focuses his power on trying to restore stability to the major cities with an emphasis on Damascus and the region including the coastline.

 

China: Reactions to 20th Communist Party Congress

Reuters has done a good job by compiling initial reactions on Xi Jinping securing a precedent-breaking third leadership term. However, if my readers find these tweaked, remember that the job was done by a western news agency.

China's Xi Jinping secured a precedent-breaking third leadership term on Sunday and introduced a new Politburo Standing Committee stacked with loyalists, cementing his place as the country's most powerful ruler since Mao Zedong. Following are the initial reactions from analysts and experts:

ALVIN TAN, HEAD OF ASIA FX STRATEGY, RBC CAPITAL MARKETS, SINGAPORE

“It does look like it’s dominated by Xi’s allies.”

“In terms of policymaking, it does mean that there is likely to be more deference to Xi Jinping’s own views about how to move the country and the economy forward... I can imagine that zero-COVID policy is likely more entrenched and there’s going to be further push on this issue of common prosperity and the like.”

DREW THOMPSON, VISITING SENIOR RESEARCH FELLOW AT NATIONAL UNIVERSITY OF SINGAPORE'S LEE KUAN YEW SCHOOL OF PUBLIC POLICY

"This is a leadership that will be focused on achieving Xi’s political goals, rather than pursuing their own agendas for what they think is best for the country. There is only one correct way to govern, and that is Xi’s way.

"Foreign investors and businesses have desperately searched for signs that liberals or 'reformers' will play a role in shaping the economy or bringing back an old economic order that prioritized foreign investment and liberalization of the economy. It is clear from the outcome of the 20th Party Congress that national security and the party’s political security will take precedence over economic growth."

RICHARD McGREGOR, SENIOR FELLOW FOR EAST ASIA, LOWY INSTITUTE, SYDNEY

"The result was a resounding victory for Xi, more decisive than many experienced observers had forecast. All of his rivals, potential and real, have been forced out of the Politburo Standing Committee and Xi loyalists took their place. The new Politburo is an emphatic statement of Xi’s dominance over the party.

"I think the congress has drawn a line between the past and the future in profound ways, both for Chinese domestic politics and the way in which its influence spills out into the rest of the world.

"Xi has dispensed with the old factional system, such as it was. He has crushed expectations that he would nurture a successor. He has ignored the informal age caps on officials serving in top positions."

CHRIS MILLER, PROFESSOR AT TUFTS UNIVERSITY, MASSACHUSETTS

“The party congress has reaffirmed Xi's decisive role in ruling the Communist Party, marking a continued shift away from collective leadership of party elites toward a personalized dictatorship. It also appears to have confirmed the downgrading of economic growth as a key party goal, relative to other agenda items such as zero-COVID and the party's political and ideological control. On tech, the key theme was self-sufficiency in science and technology, which is to be expected given the increasing decoupling of the US and Chinese tech sectors.”

GARY NG, SENIOR ECONOMIST, ASIA PACIFIC, NATIXIS, HONG KONG

“The new inner circle will extend and heighten the current policy stance, and generally it seems that most of the newly appointed officials seem to be Xi’s key allies. So I guess this is also a move of the further consolidation of power, or maybe in the future, of course, performance is important, but also loyalty is increasingly a key concern when picking officials.”

JA IAN CHONG, POLITICAL SCIENTIST, NATIONAL UNIVERSITY OF SINGAPORE

"It certainly seems to be a consolidation of Xi’s position. This means that policies will be more directly attached to Xi for good or ill. I guess that translates to more focus on party-state control over business, less dependence on imports even as the PRC (People's Republic of China) seeks to export. So probably more direct party-state direction of the economy. Investment will likely seek to meet those above goals, especially if they can bring in technology. So while there may be opportunities for investors, they have to look to both market forces and political preferences more. So more of what we have already been seeing.

"Probably no lifting of COVID-zero policy in the near future, and more assertiveness in foreign and security. Even more broadly, US-PRC friction will continue to grow."

DYLAN LOH, ASSISTANT PROFESSOR, NANYANG TECHNOLOGICAL UNIVERSITY

"It's quite clear that the Politburo have been stacked with Xi loyalists and that would mean he has a much freer rein and mandate in pursuing his domestic and foreign policies as collective leadership and decision making has been de-emphasized over coalescing around Xi and implementing his decisions. It seems that he has not elevated a potential successor for now, which gives him the flexibility for a fourth term. Regarding investment, I do not think China's policies will turn sharply because of this line up, I think by and large Xi's priorities have not changed."

"Wang Huning’s presence also indicates to me that the ideological bent of the party and Xi will continue and even deepen."

PEIQIAN LIU, CHINA ECONOMIST, NATWEST MARKETS, SINGAPORE

“It’s kind of in line and a surprise. What has been in line with expectations is really (that) President Xi is consolidating his power... And what’s been surprising is that there have been four people sort of retired from the Standing Committee – that’s more than our initial expectation of two.”

“It does look like Xi is having more say within the Politburo Standing Committee, and also with his ideology being written in the party’s charter, that’s a symbolization of him being more strategically important within the political committee.”

 

Saudi Arabia and China to work together to maintain oil market stability

Saudi and Chinese officials confirmed their willingness to work together to support stability in the international oil market. Prince Abdulaziz Bin Salman, Saudi Arabia’s Minister of Energy, held an online meeting with Zhang Jianhua, National Energy Administrator of the People's Republic of China.

During the video call, both sides confirmed that they would strengthen bilateral relations between the two countries in the field of energy.

They highlighted the significance of China and Saudi Arabia, as important global energy producers and consumers, regularly exchanging views.

The two sides confirmed their willingness to work together to support the stability of the international oil market, continue close communication, and strengthen cooperation to address emerging risks and challenges.

They also highlighted the importance of long-term and reliable oil supply to stabilize the global market that endures various uncertainties due to complex and changeable international situations, noting that the Kingdom continues to be China's most reliable partner and supplier of oil.

Discussions between the two sides covered cooperation and joint investments along the Belt and Road countries, as well as investments in integrated refining and petrochemical complexes in both countries and strengthening cooperation in the energy sector supply chain through establishing a regional hub for Chinese manufacturers to utilize the Kingdom's strategic location linking three continents.

The two sides agreed to cooperate within the framework of the Bilateral Cooperation Agreement in Peaceful Uses of Nuclear Energy between the Chinese and Saudi governments.

In addition, both ministers stressed the importance of cooperation in the field of electricity and renewables, and to collaborate in the field of clean hydrogen through research and development.

Modi turning Indian nonalignment policy into a business model

Subrahmanyam Jaishankar is the first career diplomat to serve as India's external affairs minister. Unlike many of his predecessors, he has also had experience in the private sector, serving as president of global corporate affairs for the Tata Group for about a year just before taking up his current role.

His unique background, coupled with the "Make in India" and "Atmanirbhar Bharat" driven by the administration of Prime Minister Narendra Modi to promote foreign investment and self-reliance, respectively, are reshaping Indian foreign policy.

Indian neutral position on Russian invasion of Ukraine has been the subject of considerable debate and discussions in media and policy circles. Many experts have attributed India's stance to its Cold War-era policy of nonalignment and its bonhomie with Russia, which dates back to those days.

The Indian government has justified its position as serving the country's national interests, rather than being a consequence of ideology. Its real geo-economic considerations go beyond realpolitik.

Unlike preceding administrations, the Modi government is not seeking to have one foot with the global South and one with the West in deference to the principle of nonalignment, nor is it motivated by what its developed-country partners call shared values.

Rather, behind the veneer of India's balancing act are trade and economic interests, particularly in terms of energy, defense, pharmaceuticals and high technology.

India is now poised to be the fastest-growing major economy this year, with the International Monetary Fund last week forecasting a gross-domestic product rise of 6.8%. This would be more than double the pace of China or the world as a whole at a time when developed countries look poised to enter recession.

Many economists have attributed India's strong growth to rising domestic consumption and its relative success at controlling inflation. But notably, the Indian finance ministry credits purchases of discounted Russian oil as a key factor in the country's strong macroeconomic performance.

Beyond cheap oil, India is also taking advantage of the growing geopolitical fractures to sell more arms abroad, increase space cooperation and develop markets for its pharmaceuticals.

Latin America has been a particular new area of focus, with the government setting up new consulates in Paraguay and the Dominican Republic and a state-owned fuel retailer looking to Brazil's Petrobras for supplies.

Visiting Argentina last month, Jaishankar pointedly used that country's name for the Falkland Islands, Islas Malvinas. This was not just a show of solidarity with a fellow member of the global South but part of a sales pitch for the Tejas fighter jet made by state-owned Hindustan Aeronautics.

Buenos Aires aims by year-end to finalize a decision between competing models, including offers for the US F-16, Russia's MiG-35, and the JF-17 made jointly by China and Pakistan.

The Tejas is billed as an affordable alternative to the F-16 and other Western fighters, and even to the JF-17. Priced at US$42 million a plane with an operating cost of around US$4,000 an hour, the Tejas is the cheapest lightweight combat aircraft available.

Indian Defense Minister Rajnath Singh promoted the Tejas on a visit to Egypt last month and other ministers have been traveling to the country as well. Hindustan Aeronautics is preparing to open its first overseas marketing office in Malaysia and considering adding others.

The Philippines, meanwhile, earlier this year finalized a US$375 million deal to buy supersonic BrahMos missiles from the Defence Research and Development Organisation (DRDO), another Indian state-owned arms producer. Vietnam is also a target market for Indian defense companies.

Indian arms makers have other advantages besides price over their established American rivals in pitching to countries in the global South. US arms makers are handcuffed by Washington's alliance policies, which fracture the world into camps. Thus the DRDO is working on a deal to sell Pinaka Mark-II guided missile systems to Armenia, a longtime Russian ally.

India's participation in the new I2U2 grouping with Israel, the US and the United Arab Emirates also shows how economic interests are taking precedence over past ideological priorities, in this case, support for the Palestinian cause.

That effort now yields little economic benefit for New Delhi while the I2U2 in July set plans for a US$2 billion series of food-sector industrial parks in India and a US$330 million renewable energy project in Modi's home state of Gujarat.

Modi's vision of "Make in India, make for the world" still faces many hurdles, including the country's aversion to free trade deals and other protectionist policies, but turning top government officials into business development managers charged with cultivating foreign markets is one way to advance the effort.

Indian concept of a multipolar world can be more than geopolitical balancing between global powers but also a geoeconomic endeavor carefully crafted to take advantage of different opportunities in each country.