Developed Countries: Collection of Hypocrites

The first impression I got from the news “European Union (EU) leaders agree partial embargo on Russian oil imports” is that the developed countries are nothing but a collection hypocrites. They are supplying tons of lethal arms to Ukraine to fight their proxy war with Russia, but just can’t stop buying oil and gas from the country they term aggressor. 

On top of that they are paying Russia in its currency to keep their factories running. If they (developed countries) were sincere with the people of Ukraine, they should have stopped buying Russian energy products.

According to reports, European Union (EU) leaders on May 30, 2022 agreed to a partial ban on Russian oil imports that temporarily excludes pipeline deliveries, in a diplomatic escalation against Moscow for its invasion of Ukraine in late February this year.

"Tonight, the European Council agreed a sixth package of sanctions. Concretely, it will allow a ban on oil imports from Russia with a temporary exception for imports delivered by pipeline," European Council President Charles Michel said.

He added that 75% of Russian oil imports will be immediately affected, rising to 90% of Russian oil purchases by the end of the year.

The measure will exert "maximum pressure on Russia to end the war", and includes provisions to exclude Russia's largest bank Sberbank from the Swift international payment system and to ban three Russian broadcast providers, Michel said.

The partial oil embargo emerges after weeks of negotiations within the EU bloc and makes a critical concession to Hungary, which has previously opposed a full ban at the alleged cost to its national energy security.

Hungarian Prime Minister Viktor Orban on May 30, 2022 had pushed the EU coalition for further compromises.

"Leaving out the pipeline [from the embargo] is a good approach, but in the case of an accident with the pipeline through Ukraine we have to have the right to get Russian oil from other sources," Orban said.

The partial ban will further diminish Russia's dwindling export outlets. Several European buyers are already shunning Russian crude supplies as a result of self-sanctioning or the financial sanctions already in place. Russian production has already fallen by a sharp 870,000 barrels per day (bpd) from the previous month to 9.13 million bpd in April, Argus estimates.

The announcement of the EU sanctions, combined with easing Covid-19 restrictions in China, helped send Brent crude futures to a fresh two-month high above US$122/barrel in Asian trade. The front-month Ice July Brent contract rose as high as US$122.43 at 9.01:30 GMT, up by 0.8% from the close on May 30, 2022.

 

Washington obstructing Iranian nuclear deal, says Russian Foreign Minister

Russian Foreign Minister, Sergey Lavrov has accused Washington of obstructing the restoration of the Joint Comprehensive Plan of Action (JCPOA) by trying to introduce amendments to the nuclear agreement.

Speaking at a joint press conference with his Bahraini counterpart, Abdul Latif bin Rashid Al Zayani in Manama, Lavrov stressed Moscow will continue to work to reach an agreement on the Iranian nuclear program. 

He accused the United States of trying to obtain new gains by trying to introduce amendments to the agreement, stressing that the solution lies in returning to the implementation of the JCPOA regarding the Iranian nuclear program.

Lavrov stressed that his country will continue its plan to establish security in the Persian Gulf region, with the participation of Persian Gulf states including Iran, and to maintain peace and stability in the region.

Talks in Vienna over reviving the 2015 Iran nuclear deal still hang in the balance due to US stonewalling over a range of issues raised by Iran.

Meanwhile, the International Atomic Energy Agency (IAEA) released its fresh report on the state of cooperation with Tehran. It accused Iran of not providing credible explanations on three sites in which uranium particles have been allegedly found.

“Iran has not provided explanations that are technically credible in relation to the Agency's findings at those locations,” the report said according to Reuters. It added, “The Agency remains ready to engage without delay with Iran to resolve all of these matters.”

Iranian officials said the IAEA report does not reflect the level of cooperation between Iran and the Agency. Mohammad Reza Ghaebi, the acting head of Iran's permanent representative to the Vienna-based International Organizations, said the report is one-sided and fails to reflect Iran's considerable cooperation with the IAEA.

Russia has also said that the ball is now in the US court in terms of reviving the JCPOA. 

Mikhail Ulyanov, Permanent Representative of Russia to International Organizations in Vienna, said Tuesday that it is up to the U.S. to make a decision on the Vienna talks. “The #ViennaTalks on #JCPAOA remains on pause since March 10, 2022.

According to mass media reports, Iran during the recent visit of the EU Coordinator to Tehran demonstrated certain degree of flexibility and now waits for a response from the US side. The ball is in Washington’s court,” he said on Twitter.

After a two-month lull in the talks, Iran appeared on Tuesday to be mounting new diplomatic efforts to push the talks forward. Ali Bagheri Kani, Iran’s chief negotiator, left Tehran for Oslo on Tuesday.

“Today, I departed for Oslo in continuation of recent regional and international consultations. Serious talks over bilateral, regional and international issues are on the agenda of this trip. We stress the development of relations between Iran and Norway along with our efforts to secure [our] national interests including the removal of illegal sanctions,” he said on Twitter.

The Iranian efforts come as the US keeps airing pessimism on the prospects of the talks succeeding. In his recent testimony before the Senate Foreign Relations Committee, U.S. Special Envoy for Iran Rob Malley struck a pessimistic note on the Vienna talks. 

“As I speak to you today, we do not have a deal with Iran and prospects for reaching one are, at best, tenuous,” Rob Malley told senators. He blamed the lull in talks on Iran, saying that if Iran maintains demands that go beyond the scope of the JCPOA, there will be no deal.

Iran and the US have been negotiating in Vienna through intermediaries since April 2021. But they are yet to reach a final deal.

Israel signs free trade deal with UAE, first-ever with an Arab state

Israel entered its first-ever free trade agreement with an Arab state, when Economy Minister Orna Barbivai signed the deal with her counterpart in the United Arab Emirates on Tuesday.

Ambassador to the UAE Amir Hayek in a few words announced the signing of the agreement on twitter, tweeting Done! in response to a previous tweet on the topic.

Prime Minister Naftali Bennett praised the FTA as historic and the fastest to be signed in Israel's history. He thanked Crown Prince of Abu Dhabi Mohamed Bin Zayed for accelerating the process.

"We are continuing to warm the peace between the countries," Bennett tweeted.

On Monday, Barbivai said her visit to Dubai, “It is of strategic importance to the economic relations between Israel and the United Arab Emirates.”

"Together we will remove barriers and promote comprehensive trade and new technologies," she added. 

Israel and the UAE established full diplomatic relations in August 2020, in what was called the Abraham Accords. Bahrain, Sudan and Morocco followed soon after.

Israel has nineteen free agreements, including the one with the UAE. Israel also has a more limited free-trade agreement with Jordan, but the new deal with the UAE is much broader and is similar to those with the United States and with the European Union.

The free trade agreement is the UAE’s second, following one with India earlier this year.

This agreement covers 96% of the trade between Israel and the UAE, which was recorded last year at US$885 million.

That is more than double Israel's US$330 million in trade with Egypt in 2021, even though the two countries have had a peace agreement since 1979.

According to the Economy and Industry Ministry, the level of trade in 2020 was reported at US$120 million and at US$ one million in 2010. 

The FTA signing proceeded as planned, even though the UAE criticized Israel a day earlier for allowing Jews to visit the Temple Mount, Judaism's holiest site.

"The UAE today strongly condemned the storming of Al Aqsa Mosque courtyard by extremist settlers under the protection of Israeli forces," a statement by the Emirati Foreign Ministry read, calling on Israel "to take responsibility for reducing escalation and ending all attacks and practices that lead to the continuation of tensions."

There was no documentation of violence by Jews or Israelis on the Temple Mount this week, though some did pray at the site in contravention of the rules for Jewish visitors. Some Muslims threw rocks at visitors and police from the Al Aqsa Mosque.

The statement came a day after the annual Jerusalem Day flag march through the Old City, which was mostly peaceful, though some Jews and Muslims chanted calls for violence and some minor clashes, leading to about 50 arrests.

 

India buys 34 million barrels Russian oil at discounted price

According to a Reuters report, India has received 34 million barrels of discounted Russian oil since Moscow invaded Ukraine on Feb 24, 2022. This has more than trebled the value of total imports from Russia, including other products, compared with the same period of 2021.

The volume of India's seaborne oil imports from Russia exclude CPC Blend oil, which is also exported via Russia's Black Sea port, but mostly supplied by Kazakhstan's subsidiaries of western countries as transit volumes.

India's oil imports from Russia have been rising since February this year, as Asia's third-largest economy and the world's third-biggest oil importer, turned to deeply discounted Russian oil, mostly Urals crude, to cut its energy imports bill.

India received more than 24 million barrels of Russian crude oil in May 2022, up from 7.2 million barrels in April and about 3 million barrels in March. The quantity is set to rise to about 28 million barrels in June.

Surging energy imports helped push India's total goods imports from Russia between February 24 and May 26 this year to US$6.4 billion, as compared to US$1.99 billion in the same period last year.

India's exports to Russia fell nearly 50% to US$377 million over that period, as its government is yet to set up a formal payment mechanism.

As the West responded to the invasion with a barrage of sanctions, India has come under fire for its continued purchases of Russian energy.

New Delhi has brushed off the criticism, saying those imports made only a fraction of the country's overall needs and has said it will keep buying cheap Russian oil, arguing a sudden stop would drive up costs for its consumers.

Russian and Indian energy companies have also been discussing term supply agreements and possible acquisitions of stakes in Russian oil and gas projects.

Former Prime Minister of Pakistan, Imran Khan has once again praised India for buying discounted oil from Russia despite being a key member of a US-led alliance called QUAD.

“Despite being part of QUAD, India sustained pressure from the US and bought discounted Russian oil to provide relief to the masses,” Khan wrote in a tweet.

“This is what our government was working to achieve with the help of an independent foreign policy,” he added.

In a second tweet, Khan claimed that for his government, “Pakistan’s interest was supreme but unfortunately the local Mir Jafars and Mir Sadiqs bowed to external pressure, forcing a regime change and are now running around like a headless chicken with the economy in a tailspin”.

Khan also tagged to his tweet a South Asia Index report, saying: “After buying discounted oil from Russia, the Indian government reduced petrol price by 9.5 Indian rupees per litre, Diesel price was also reduced by 7 rupees per litre.”

Michael Kugelman, a scholar of South Asian affairs at the Wilson Centre, Washington, also referred to this report, saying: “This is why Khan was praising India during his final days as PM.”

Khan wanted to import wheat and eventually gas from Russia.

 

Iran exploring ways to boost trade with India and Pakistan

Many analysts can recall the fanfare about Iran-Pakistan-India (IPI) gas pipeline project, which was sabotaged by the economic sanctions imposed on Iran by the United States. Anticipating that Iran nuclear negotiations may lead to easing of some of the restriction, the three countries have started exploring trade opportunities   

TPO hosts Indian trade delegation

Reportedly, a trade delegation from India’s PHD Chamber of Commerce and Industry visited Iran’s Trade Promotion Organization (TPO) to discuss ways of expanding trade ties between the private sectors of the two countries. The Indian delegation was received by the acting director of TPO’s Indian Subcontinent Office Reza Seyyed-Aghazadeh, the TPO portal reported on Monday.

Talking on the occasion, Seyyed-Aghazadeh expressed hope for the continuation of such meetings in order to develop trade relations and increase the volume of trade between Iran and India, and called for the expansion of relations between the two countries. He also expressed TPO’s full support for the private sectors of the two countries.

Iran-Pakistan trade workshop

Trade Promotion Organization (TPO) of Iran has also announced to hold a training workshop for Iranian businessmen who are interested in trading with Pakistan.

Marketing strategies and methods, cultural awareness, and the trade-related laws and regulations of Pakistan are among the subjects to be covered in the workshop which is due to be held on June 12, 2022.

It is pertinent to note that the TPO has held several business training workshops with different countries. However, the training workshop with Pakistan is the first such event that will be attended by TPO Head, Ambassadors and economic and trade advisors of the two countries, and officials of Pakistani and Iranian chambers of commerce.

  

Ukraine conflict reshaping global oil markets

According to a Reuters report, Russian invasion of Ukraine has reconfigured the global oil market, with African suppliers stepping in to meet European demand and Moscow, stung by Western sanctions, increasingly tapping risky ship-to-ship transfers to get its crude to Asia.

The reroutings mark the biggest supply-side shakeup of the global oil trade since the US shale revolution altered the shape of the market around a decade ago and suggest Russia will be able to navigate a European Union (EU) oil ban, provided Asia and China continue to buy its crude.

Sanctions imposed on Moscow after the conflict in Ukraine kicked off in February, including a US ban on its oil imports, have prompted Russia to pivot away from Europe, where its crude is shunned, to customers in India and China who are picking up cargoes at a steep discount, according to industry data and traders.

Russian exports were back to pre-invasion levels in April, according to data from the Paris-based International Energy Agency and oil prices have stabilized around US$110 after hitting a 14-year high above US$139 a barrel in March.

Even if the European Union agrees to an oil ban in its next round of Russian sanctions, analysts said the impact could be tempered by demand from Asia.

"Unless the West puts diplomatic pressure on Asian buyers, we do not see the supply gap widening and oil prices spiking," said Norbert Rücker of Julius Baer.

A complex patchwork of US, EU and British sanctions have prohibited Russian-owned or flagged ships from calling at ports meaning that some of the increased trade to Asia is being facilitated via ship-to-ship transfer at sea -- a costly process where the risk of spills is greater.

Overall, the flow of Russian oil to Asia via the sea has jumped at least 50% since the start of the year, according to tanker-tracker Petro-Logistics and other data.

Transfers between vessels, which account for a small fraction of the overall sea trade, have shifted away from the Danish coast to the Mediterranean Sea to avoid sanctions and protests.

"Ship-to-ship (STS) transfers were common in Danish waters, at the entry point of the Baltic Sea," Petro-Logistics President Mark Gerber told Reuters. "Those are not happening anymore; hence the STS trend of sanctioned tanker to non-sanctioned tanker increasing in the warmer and friendlier Mediterranean waters."

Gerber put the volumes of Russian crude and products being transferred between tankers in the Mediterranean at about 400,000 barrels per day (bpd), of which the majority is going to Asia, adding to the 2.3 million bpd going directly.

In January, before the invasion, around 1.5 million bpd were being sent directly to Asia.

Russian oil is loaded on Aframax or Suezmax tankers that carry less than one million barrels and it is transferred at sea to larger vessels that can take 2 million barrels, making shipping more cost effective, traders said.

The seaborne volumes are only part of the total exports from Russia. Including pipeline supplies, total Russian crude and products exports increased to just above 8 million bpd in April, back to the pre-invasion rate.

To compensate for the loss of Russian oil, European refiners have been turning to imports of West African crude, which are up 17% in April compared to the 2018-2021 average according to Petro-Logistics.

Eikon data also shows an increase and indicates 660,000 bpd mostly from Nigeria, Angola and Cameroon is arriving in northwest Europe in May, with three cargoes of Nigerian Amenam coming compared to one in February.

Volumes of West African crude to India, meanwhile, have nearly halved, according to Gerber, with 280,000 bpd delivered in April from 510,000 bpd in March as Delhi switches to Russian supply.

With European demand red-hot, the prices of Nigerian light, sweet crude grades in particular are hitting record highs, according to traders, with Forcados crude for example offered at a premium of at least US$7 to Brent.

Supply from North Africa to Europe is up by 30% since March, Petro-Logistics said. Of this, Eikon data indicates arrivals into northwest Europe from Egypt's Sidi Kerir port, which analysts say is likely Saudi crude, will almost double versus March to above 400,000 bpd in May.

The United States has also boosted supply to Europe. European crude imports in May from the US on a delivered basis are up over 15% versus March, according to tracking company Kpler, the highest monthly pace in its records. Europe has discharged about 1.45 million bpd of crude from the United States.

 

Iranian immunity over, Israeli Prime Minister

In a hint to possible Israeli involvement in the recent assassination of an Iranian military officer, Prime Minister Naftali Bennett said on Sunday that Iran would not go unpunished for instigating attacks through its proxies. 

IRGC Colonel Hassan Sayad Khodai was shot dead last week while sitting in his car and by two people on a motorcycle. The tactic echoed previous killings in Iran that focused on nuclear scientists and were widely pinned on Mossad.

"For many years, the Iranian regime has carried out terrorism against Israel and the region via proxies but for some reason the head of the octopus – Iran itself – has enjoyed immunity," Bennett said at the start of the weekly cabinet meeting in Jerusalem.  "As we have said more than once, the era of immunity for the Iranian regime is over." 

"Those who finance terrorists, those who arm terrorists, and those who send terrorists – will pay the full price," he added.

In another attack on Thursday, an Iranian engineer was killed in an explosion said to have been caused by drones carrying explosives at the Parchin military base, where Iran has allegedly conducted nuclear weapons tests in the past. 

Israel has been on high alert over the last week amid concern that Iran will try to retaliate for Khodai's death. On Saturday, Iran revealed images from an underground secret drone base that it operates, amid simmering tensions in the Gulf.  State TV said 100 drones were being kept in the heart of the Zagros Mountains, including Ababil-5, which it said were fitted with Qaem-9 missiles, an Iranian-made version of air-to-surface US Hellfire.

At the government meeting Bennett recalled a story published last week in the Wall Street Journal claiming that a cache of 100,000 documents Israel spirited out of Tehran in 2018 included evidence that the Islamic Republic had used reports from the International Atomic Energy Agency to hide its former nuclear program.

"Iran has also been investing in lies such as its deliberate misleading of the IAEA in order to evade visits by the agency, as was revealed last week. The Iranian regime is based on tyranny, terror and lies," Bennett stated.

Bennett spoke in advance of a visit to Washington this week by an Israeli delegation led by National Security Adviser Eyal Hulata to discuss options should talks to revive the 2015 Iran nuclear deal fail. 

They are also likely to discuss the upcoming IAEA Board of Governors' Meeting in Vienna next week and the possibility of a resolution condemning Iran.