US crude oil exports to Asia to hit record high

According to a Reuters report, deliveries of US crude oil to Asia are set to touch a record 1.8 million barrels per day in November, 2022, as demand climbs on a widening discount to global oil price.

Refiners in China, India and South Korea are emerging as big buyers of US crude oil after several months of scooping up cheap Russian barrels. Asia's renewed buying reflects soaring demand for crude to produce diesel fuel and comes as Europe continues to stock up in the aftermath of Western sanctions on Russian purchases.

Overall, US crude exports last week touched a weekly record of 5.1 million barrels per day (bpd), boosted by higher shale production. The US benchmark West Texas Intermediate (WTI) traded at a nearly US$9 a barrel discount to Brent, as compared to a US$6 discount at the start of September. A wider discount makes US oil more affordable to foreign buyers.

South Korea is set to import a record 619,000 barrels per day (bpd) of US crude oil, according to Refinitiv, becoming the month's top Asian importer of US crude.

China will draw at least 450,000 bpd, its highest since December 2020 while India's demand is forecast to be the highest since March this year. Imports of both the countries are rising in the face of higher tanker rates up about 40% on some segments in October.

China's refineries are stepping up production with the end of maintenance overhauls and receipt of higher fuel export quotas to lift sagging merchandise exports.

There is also strong global demand for diesel that is encouraging refiners across the region to add production runs, said Matt Smith, analyst at data firm Kpler.

"With Asian refiners set to ramp up refinery runs, with China's sizeable product export quota, and with OPEC's core producers dialing back on output, demand for US crude is strong," he said. The Organization of Petroleum Exporting Countries (OPEC) and its allies this month began cutting output by 2 million bpd on fears of lower demand amid slowing economies.

US oil production was 11.98 million bpd in August, as producers raise activity after pandemic cutbacks.

"Despite rising freight costs, US crude is still economical for Asian buyers, and the buying interest would remain as long as the arbitrage window is still open," a trader said.

 

Pakistan needs food grains storage facilities

This year Pakistan is anticipated to face a shortfall of wheat. The estimated shortfall will require the country to import 2.5 million tons of staple food grain. This will cost the country US$1.3 billion, besides handling charges to be paid in local currency.

The need to import wheat has once again highlighted the importance of attaining self-sufficiency in the production of wheat, introducing efficient storage facilities and trading systems. In this article an effort has been made to explore ways to overcome the shortages and contain outflow of precious foreign exchange.

Wheat is an agricultural commodity and its production is dependent on a number of factors. This year the crop size is relatively below the target. Therefore, to avoid any price volatility the Government has to import wheat. 

Pakistan doesn’t have modern grain storage silos and a large quantity is stored in flat-bed warehouses. It is estimated that around 20% of the produce goes stale before reaching the market. If this quantity is saved from going stale, there may not be a need to import wheat. On the contrary, country may also earn foreign exchange by exporting the saved quantity.

The Government of Pakistan has introduced warehouse receipt financing system in collaboration with commercial banks. The accredited warehouses have started issuing receipt electronically. The encouraging news is that local warehouses have issued receipts worth one billion rupees. The landmark achievement is that out of these financing has been obtained up to 80% of the total amount of receipts issued.

The strength of electronically issued warehouse receipts hinges upon making agricultural output, eligible good quality collateral, for availing financial credit, particularly benefiting the small farmers who find it difficult to approach banks for credit to do non availability of basic collateral requirement of banks. This system has the capability of transforming the agriculture sector in the following manner:

(a) The System will be utilized by banks to extend financing, as it has enabled banks / lenders to create a charge on the commodity balances through the depository; the charged collateral is then immobilized in the warehouse till the lien is lifted.

(b) Real time access to the location and quantity of the commodity and providing a comfort that the commodity of a stated type, quality and quantity through the Warehouse Receipt system does exist duly charged to it for its financing /credit flow.

(c) The revenue streams will be generated by enabling financial institutions to lower their spreads due to the lower risk attached to individual deals, and therefore necessitating less set-aside from the financiers. This will liberate more capital for the banks, and enable them to increase their business volume, contributing therewith to the global growth of Pakistan’s economy.

(d) Markets transparency is another crucial element that comes along the proposed scheme. Through the development of secondary market, all players will be able to know and act on the National Spot Prices. In the future, and with the development of complex derivative products, actors will likely use future pricing, options management and other technical trading tools.

The other element is to separate the physical handling of commodities from their financial and accounting aspects. Banks / lenders could rest assured that a responsible entity is taking care of the physical aspects of the commodity while they need to look after only the financial and accounting aspects. This approach elevates commodities to the same plane as bonds, currencies or stocks and securities and then could be dealt with as such.

When farmer receives EWR, he gets two options: 1) obtain cash by using the produce as collateral or 2) sell it to those interested in acquiring physical delivery of the produces. The trading of EWR can be done at technology driven trading platform of Pakistan Mercantile Exchange (PMEX), the only multi commodity futures exchange operating in the country.

State Bank of Pakistan, like central banks of other developing countries, is introducing schemes to increase access of small farmers to the formal credit channels, to save them from exploitation by informal money lenders.

The SBP recently launched the electronic warehouse receipt (EWR) system for maize crop in Kasur district, almost a year after the scheme was introduced for paddy crop in Hafizabad.

The EWR enables the depositor, whether a producer or dealer, of an agriculture commodity to use it as collateral for obtaining bank loans or trade it at the local commodity exchange.

This will reduce the pressure on farmers to sell their produce immediately after harvests when prices are normally low. This will ensure a better return to farmers and also help stabilize market prices. The biggest advantage will be reduction in post-harvest losses.

This will not only reduce the pressure on farmers to sell their produce in panic immediately after harvests, but also allow the agriculture commodities to be used as collateral for bank loans

However, the insufficient number of accredited warehouses complying with the preservation norms, lack of awareness among farmers and their limited business skills, and little incentives for buyers to purchase commodities from the warehouses are identified as some of the stumbling blocks in making this system a norm.

The EWR system can only be beneficial for the community if it includes developing adequate infrastructure, comprising of warehouses and logistics facilities.

According to the inform sources there is an acute shortage of accredited warehouses and logistic facilities. The experts demand incentivizing construction of infrastructure so that investors are attracted to invest more and more in the sector.

Ironically, the purchase of the biggest crop, wheat, is done by the government, which uses its own/rented warehouses which are not suitable for the storage of staple food grain.

It is also necessary to remind that besides wheat, large quantities of rice and maize are produced in the country. This offers round the year demand for modern warehouses, particularly grain storage silos. 

Is Netanyahu-Itamar Ben-Gvir alliance a good omen?

Israel Prime Minister Yair Lapid on Thursday congratulated Benjamin Netanyahu on his election victory as final results confirmed the former premier's triumphant comeback at the head of a solidly right-wing alliance.

Netanyahu's victory is set to end an unprecedented stalemate in Israel after five elections in less than four years.

This time Netanyahu, the dominant Israeli politician of his generation, won a clear parliamentary majority, boosted by ultranationalist and religious parties.

Tuesday's ballot saw out the centrist Lapid, and his rare alliance of conservatives, liberals and Arab politicians which, over 18 months in power, made diplomatic inroads with Turkey and Lebanon and kept the economy humming.

With the conflict with the Palestinians surging anew and touching off Jewish-Arab tensions within Israel, Netanyahu's rightist Likud and kindred parties took 64 of the Knesset's 120 seats.

Netanyahu still has to be officially tasked by the president with forming a government, a process that could take weeks.

"The time has come to impose order here. The time has come for there to be a landlord," tweeted Itamar Ben-Gvir of the far-right Religious Zionism party, Likud's likely senior partner.

He was responding to a stabbing reported by Jerusalem police. In the West Bank, troops killed an Islamic Jihad militant and a 45-year-old man in a separate incident, medics said. Queried on the latter death, the army said it opened fire when Palestinians attacked them with rocks and petrol bombs.

Later in the evening, air attack sirens went off in southern Israel after militants in Gaza fired a rocket that was apparently intercepted by missile defences, the military said.

A West Bank settler and former member of Kach, a Jewish militant group on Israeli and US terrorist watchlists, Ben-Gvir wants to become police minister.

Israeli media, citing political sources, said the new government may be clinched by mid-month. Previous coalitions in recent years have had narrower parliamentary majorities that made them vulnerable to no-confidence motions.

With coalition building talks yet to officially begin, it was still unclear what position Ben-Gvir might hold in a future government. Since the election, both he and Netanyahu have pledged to serve all citizens.

Ben-Gvir's ascendancy has stirred alarm among the 21% Arab minority and centre-left Jews - and especially among Palestinians whose US-sponsored statehood talks with Israel broke down in 2014.

While Washington has publicly reserved judgment pending the new Israeli coalition's formation, a US State Department spokesman on Wednesday emphasized the countries' "shared values".

"We hope that all Israeli government officials will continue to share the values of an open, democratic society, including tolerance and respect for all in civil society, particularly for minority groups," the spokesperson said.

US Ambassador to Israel Thomas Nides said he spoke with Netanyahu and told him he looked forward to "working together to maintain the unbreakable bond."

 

Netanyahu-Ben Gvir government may bring Israel economic sanctions

On Tuesday, voters turned out in record numbers in order to have their say in the democratic process, resulting in the election of a government led by former Prime Minister Benjamin Netanyahu and including outspoken political extremist Itamar Ben-Gvir, if its campaign promises are fulfilled, could radically impact the nation’s economy.

The economy that Netanyahu government stands to inherit is actually doing pretty well, compared to other developed countries. Israel currently boasts the second-lowest inflation rate in the OECD and one of its highest growth rates. As such, the country’s incoming leaders will have more economic degrees of freedom than other nations may have.

With that in mind, “The promises made by these parties are such that they can very quickly lead Israel down the rabbit-hole,” said Prof. Dan Ben-David, Head of Shoresh Institution for Socioeconomic Research and an economist at Tel-Aviv University. According to him, the threat posed to Israel’s economic well-being by the nation’s new leadership is both present and substantial.

“In terms of straightforward economics, they are promising tons of money to various sectors. Netanyahu has promised free education from the age of zero, he talked about freezing interest rates and arnona (municipal tax payments), he promised to give full funding to all of the Haredi schools,” Ben-David said. “That’s going to cost a lot of money, not to mention the fact that it’s completely going to mortgage Israel’s future.”

Basic economics aside, there is a critical political factor in play. If Ben-Gvir’s Otzma Yehudit Party manages to reform the country’s judicial and political systems as it intends to do, it could lead to severe ramifications on the world stage.

“Those actions can basically bring down the developed world’s wrath on us,” Ben-David warned. “When you have Jewish supremacists in leading political cabinet positions, what does that say about Israel’s ability to defend itself against accusations of apartheid elsewhere? All you need to do is look at what happened in South Africa to get a glimpse of the kind of economic sanctions that we may get hit with if this government follows through with even a part of the things that they promised to do.”

A sufficient amount of serious economic turmoil from mishandling or severe sanctions could in turn lead to the evacuation of Israel’s largest economic contributors, Ben-David warned.

“It could happen way before the international community wakes up. The entire hi-tech industry, all of the physicians and the entire senior faculty in all of the research universities in Israel make up less than 4% of the population,” he said. “If a critical mass of the young, educated and skilled people in Israel reach the conclusion that it’s game over and leave in the next few years, then the game ends a lot quicker than it would have otherwise.”

It is still uncertain which of the many promises made by the entering parties will come to fruition, but if Israel’s new leadership doesn’t tread carefully, those who put them there could be in for even more change than they asked for.

 

United States faces looming threat of civil war

With the November midterm elections in the United States just a week away, there are growing fears the country could slip into a civil war. These are views being expressed by officials and people inside the US, which is witnessing division and polarization not seen since the 1960s.

There is certainly no lack of ammunition on the streets of the United States for a civil war to break out. The United States, which has constantly interfered in the internal affairs of other sovereign countries, with the aim of splitting those nations, causing sedition, riots or creating other forms of confrontation, now faces the bitter reality of its own possible civil war.

Experts say the ideology and hatred that has been spread by members of Congress and also spearheaded by ex-President Donald Trump has always been in the minds and souls of many Americans. All that Trump did, during rhetorical speeches, was to promote extremist ideology, particularly among his hardcore supporters.

The ‘Dis-United States of America’ as some US media outlets and scholars refer to, is plunging America into unknown territory. The insurrection on Capitol Hill on January 06, 2021 when Trump supporters were told by the ex-president to fight like hell to overturn his defeat by Joe Biden attempted to stop the certification of electoral results led to nine deaths, including suicides among police officers.

Since then, fears of civil war have grown. The hardcore Trump supporters are furious that their president not only lost the presidential election but also saw the FBI raid his home in Florida in search of secret documents.

Death threats have been made against FBI agents, while reports of violence among supporters of the Republican and Democratic parties have been emerging. This is while the term ‘civil war’ has gone viral on social media platforms amid the intense social and political disagreements in the country. The FBI and the Department of Homeland Security are said to be taking the threats very seriously.

The internal discussions in the US over a new civil war are on the rise and mostly revolve over concerns and anxieties among Americans about the number of crises the country is facing. Topping the agenda is the deep division between Republicans and Democrats as well as among supporters of the two camps, especially with an election looming.

Apart from the widening political polarization, there is social division and economic hardships that could make some Americans even more radical.

Developments in the US and Europe, over the past decade or two, strongly indicate that during times of economic hardship, which Americans are facing as a result of the Ukraine war, make people with radical extremist ideologies take their anger out at those who oppose their political views or minority groups.

Americans are currently facing many challenges, including mass shootings, inflation, racial and gender inequality, rising crime rates, drug abuse, climate change and immigration among other issues.   

In late August this year, a survey revealed that more than two-fifths of Americans believe civil war is at least somewhat likely in the next 10 years. The figure increased to more than half among those who self-identified themselves as strong Republicans. In the poll by YouGov and the Economist, 65% of all respondents said political violence had increased since the start of 2021.

Barbara F. Walter, a professor at the University of California and author of the book “How Civil Wars Start: And How to Stop Them”, has conducted research for the CIA on how countries slide into civil war and says that the United States meets many of the criteria her group identified. She has also warned that the US is coming dangerously close to those conditions that give rise to a civil war.

According to a recent Time article, "41% of Biden voters and 52% of Trump voters polled favor red or blue states seceding from the Union to form their own separate country, with 30% of Republicans and 11% of Democrats ready to resort to violence to save the country."

To put that into perspective, there are some 20 million Americans in the Country who are prepared to take up arms and exchange bullets on the streets of America in order to divide the country into two.

In October, the New York Times quoted a data entry specialist as expressing concern that something will happen around the November elections that will be akin to January 06, 2022 but much more violent, where armed protest groups from both sides of the political spectrum come to blows.

There is no shortage of guns in the US for that scenario to take place. The country has more than 400 million firearms in the hands of its citizens. There are more guns on the streets of the United States than there are people.

In an interview last month, historian Jon Meacham, who has aided US President Joe Biden in a speechwriter capacity, said the US is at a greater risk of civil conflict than during the Great Depression.

There are also strong disagreements on political issues such as gun control among the supporters of the two parties that dominate the US political system. Experts say there is a lack of initiatives to bring these differences closer together to calm down supporters of the two parties, which could potentially plunge the country into violence.

"At the moment there seems to be no program for resolving the differences. Both parties seem to be largely controlled by their more radical elements, making bridge-building very difficult, if not impossible," William Jones, the Washington bureau chief for the Executive Intelligence Review, told the Global Times.

While many believe the Republicans are the party of white supremacy, some maintain that Democrats are actually the party of white supremacy, as they were in the 19th and part of the 20th century, and that Democrats hate and want to destroy their own country. Tudor Dixon, the Republican nominee who ran for governor of Michigan in the summer of 2020 made these remarks to US news outlet CNN:

“The country today is divided, and this was the plan. It’s been in the works for years. The idea that you can topple the greatest country in the world, but to topple a country like the United States of America, you must be planning this for decades,” said Dixon. “Why wouldn’t that come from the party that lost the Civil War? The party that wanted to own people because they viewed them as less than human? Do you think that the Democrats are losing to the north?”

Americans are in possession of 393.3 million weapons, according to a 2018 report by the Small Arms Survey, a Geneva-based organization. This is more than the country’s population now of about 330 million. The number of guns has most certainly grown after Americans went on a record gun buying spree beginning in 2020 amid the Covid pandemic. The National Instant Criminal Background Check System, which the FBI collects and is widely used as a proxy for firearms purchases, jumped 40% in 2020 from the previous year to 39.7 million. That number was slightly down to 38.9 million checks in 2021.

 

US Fed hikes interest rates by 75 basis points for fourth time this year

The US Federal Reserve on Wednesday hiked interest rates by three-quarters of a percentage point, pressing even harder on the brakes of the economy in a scramble to slow inflation.

The Federal Open Market Committee (FOMC), the panel of Fed officials responsible for monetary policy, boosted the central bank’s baseline interest rate range to a span of 3.75 to 4 percent. It is the fourth consecutive 75 basis point hike issued by the Fed and sixth interest rate increase since March.

As the Fed raises its baseline interest rate range, interest rates on mortgages, credit cards, and other loans rise as well. Higher borrowing costs tend to slow the economy as households and businesses have less money to spend on goods and services.

The Fed’s latest hike will add even more financial pressure to a resilient but slowing US economy that some experts believe is on the precipice of recession.

The Fed’s rapid interest rate hikes have caused home sales to collapse and pushed businesses to pull back investment, two major forces that could slow the US economy. Higher Fed interest rates also deepen economic turmoil abroad, which could boomerang on the US.

Inflation has remained stubbornly high as a strong US job market helps support consumer spending and supply shocks — particularly the war in Ukraine — push prices for food and fuel higher. Prices rose 6.2% over the past 12 months, according to the personal consumption expenditures (PCE) price index, the Fed’s preferred inflation gauge.

The Fed has faced growing pressure from some policymakers, especially Democratic lawmakers, to slow down its rate hike campaign amid growing signs of a looming recession. 

Critics of the Fed’s approach argue the bank will needlessly drive millions into unemployment by ignoring clear signs of inflation falling, the lagging effect of Fed interest rate hikes and the bank’s inability to solve supply snarls.

Fed leaders, however, have insisted for months that they will continue to boost interest rates until inflation shows signs of falling toward the bank’s annual 2 percent target. 

 

 

Elpi Petraki elected WISTA President

Elpi Petraki has been elected as the new President of WISTA International (Women's International Shipping and Trading Association).

Petraki from WISTA Hellas, and also Operations, Chartering & Business Development Manager at ENEA Management, was elected on 26 October at WISTA’s Agm in Geneva.

The nominees for the position of President were Petraki and Alexandra Anagnostis-Irons, WISTA USA.

Commenting on her election Petraki said, "I am truly honoured to have been elected as President of WISTA International. Diversity and inclusion in maritime have never been in the spotlight like today and whilst much has been achieved in recent times, there is still a great deal to be done. WISTA International has a powerful voice that must be heard, continuing to raise awareness for the incredible contribution women make to the industry.”

She said she looked forward to working with WISTA’s 56 national associations on issues such as decarburization, digitalization and attracting new talent and providing equal and equitable opportunities for all.

Outgoing WISTA Despina Theodosiou, said, "After five years, the time has come for me to hang up my hat as President of WISTA International. First, I'd like to say a huge thank you to the other members of the WISTA International Executive Committee, who have provided a tremendous amount of support over the years. Secondly, I'd like to express my sincere gratitude to the Presidents of the 56 National WISTA Associations for entrusting me to continue to deliver WISTA's mission. It has been a pleasure to work with you all.”

Elpi Petraki – President of WISTA Hellas and Operations, Chartering & Business Development Manager, ENEA Management Inc., has been announced as the latest Ambassador of the growing Seatrade Maritime Club in September this year.

As the Seatrade Maritime Club ambassador from Greece, Elpi joins ambassadors from Cyprus, the UAE, Singapore, the Americas and Isle of Man who are helping pave the way for the global club to grow geographically and fulfil its objective to bring together senior management from the ship-owning community eager to tackle the challenges facing the industry and proactively drive positive change.

Commenting on the appointments, Emma Howell, Director of Digital, Seatrade Maritime said, “We could not be more delighted to have Elpi on board with us.  She is a well-known personality in shipping, both in Greece and internationally, and an active member of the shipping community. Elpi regularly speaks at industry conferences and events on a wide range of topics, from diversity in maritime and attracting the next generation of talent, to decarburization, new technologies and how to address the challenges facing the industry. “

Elpi has been working for ENEA Management Inc. for the last 24 years, a Greek shipping company that manages a fleet of small sized, clean and specialized tankers.  During this time, she has been involved in various parts of the business, with a primary focus on both operations and chartering of its fleet as well as business development.

Serving as the 2nd Vice President of the Hellenic Shortsea Shipowners Association (HSSA), Elpi is involved in the promotion and the overall development of short sea shipping within National and European borders. Additionally, Elpi is a member of the Board of Directors for the Hellenic Chamber of Shipping and is an active member of Intertanko. Most recently, Elpi was invited to be an Honorary Fellow of the Institute of Chartered Shipbrokers, the highest honour to be bestowed by the institute in recognition of an individual's contribution to commercial shipping.

As well as current President of WISTA Hellas, Elpi is also a member of the Board of the Hellenic Maritime Museum, assisting in the preservation of maritime history and the development of a culture whereby younger generations are exposed to and come to appreciate maritime and naval traditions.