Iranian heavy crude oil price rises over 3% in January 2023

Iranian heavy oil price increased by US$2.45 in January 2023 registering slightly more than 3% increase as compared to December 2022, according to OPEC’s latest monthly report published on February 14, 2023.

The Iranian heavy crude oil price reached US$81.56 per barrel in the first month of 2023, compared to US$79.11 per barrel in December 2022.

According to the report, the country’s average heavy crude price came to US$85.59 in 2022.

The average price of Iranian oil in the first month of 2023 registered a decrease of US$4.03 compared to the same month in 2022. The price of Iranian heavy crude in the first month of 2022 was US$85.59 per barrel, at an average.

The report put Iranian crude output for January 2023 at 2.557 million barrels per day (bpd) indicating a 22,000 bpd decrease as compared to the figure for the previous month.

Based on OPEC data, the country’s average crude output in the last quarter of 2022 was reported at 2.567 million bpd indicating a nearly 2,000 bpd rise as compared to the average figure for the year’s third quarter.

OPEC basket price also increased by US$1.94 or 2.4 percent to settle at US$81.62 a barrel in January 2023 as compared to the earlier month.

Iranian heavy crude oil prices had followed an upward trend from the beginning of 2022 up to June, however, following the increase in production by OPEC members and the fading of the pandemic impacts on the global economy, the prices started to fall in late 2022.

Despite the negative impacts of the US sanctions, Iran has been ramping up its oil production and exports over the past few months.

Earlier this month, Iranian Oil Minister Javad Oji said the country’s income from the sales of oil, natural gas, gas condensate, and petroleum products in the first 10 months of the current Iranian year increased by 40% as compared to the same period last year.

Addressing an open session of the parliament on February 01, Oji said that 70 million barrels of gas condensate were exported in the mentioned time span.

According to the official, the goals set in the current year’s national budget bill for the exports of oil and gas will definitely be achieved by the yearend.

He noted that the National Iranian Oil Company (NIOC) has already sold enough oil and gas and petroleum products to realize the budget goals by 100%, however, collecting the revenues needs more time.

Back in January 2023, the US Energy Information Administration (EIA) in a report put Iran’s average oil production in 2022 at 2.54 million bpd, 140,000 bpd more than the previous year.

Iran's oil production in 2021 was about 2.4 million bpd.

 

Pakistan: Audacious attack on Karachi Police Office raises many questions

The terrorist attack at Karachi Police Office (KPO) located in the heart of the provincial capital of Sindh raises serious questions about the state of security arrangements in the country.

It is necessary to take into account that the sensitive installation is located in the vicinity of around a dozen more sensitive installations.

Analysts term the assault on headquarters of the law enforcement agency a serious security lapse.

There is an urgent need to revisit the situation as to determine how secure security offices and other sensitive installations are.

The recent Peshawar attack was a wake-up call for the law enforcing agencies across the country. Against this backdrop, it is a matter of grave concern as to how militants had succeeded in reaching Karachi.

Security experts term the attack on KPO as a symbolic one and a kind of message from militants to the authorities about their preparations and next targets.

KPO just can’t be termed a soft target. It is message from the terrorists: ‘we are that close’. It’s a serious security lapse. It’s not a routine terrorist activity. It cannot be ignored.

The copy book reply is, “The situation has to be reviewed, additional forces have to be deployed, jawans need modern equipment and training”.

It is evident that in the past wave of terrorism, the militant outfits often went for soft targets attacking public places, markets, Masjids, Shrines and Imambargahs, but the fresh one had started with a visible shift in their line of action.

The recent attacks show the preparedness of the militants. A question arises, if they can attack sensitive facilities, how vulnerable are public places?

As I am writing these lines, the event has flashed back painful memories of the brutal past murderous, and brazen assaults in Karachi. These include the 2011 Mehran Base ambush, as well as 2014 attack at Karachi airport.

There has been no let-up in terrorist attacks. On Thursday, the terrorists attacked CTD personnel in Punjab’s Kalabagh area, in Mianwali district. A few weeks earlier, members of an outfit had raided a police station in the same district, located close to KP. But Friday’s attack in Karachi is a far more complex operation.

Dawn has rightly hinted in its editorial, “This is another wakeup call for the squabbling politicians who rule in our name, as well as the security establishment that keeps reminding us that ‘all is well’. Clearly, both stakeholders must understand the true situation.”

According to media reports, the federal interior minister told a TV channel he was under the impression that militants did not have access beyond KP and Balochistan.

His impression was obviously flawed. The terrorists have the ability, as well as the links and operational wherewithal, to strike at will, while the state’s response has been largely unimpressive.

In Karachi assault, it is likely that sleeper cells have been used. There is no shortage of financers as well as sympathizers of the militant outfits in the port city.

The state, particularly the law enforcing agencies need to focus on their prime responsibilities to avoid more of such attacks taking place.

 

 

Pakistan Stock Exchange witnesses 45.8%WoW decline in average daily trading volume

The benchmark index of Pakistan Stock Exchange (PSX) closed the week ended on February 17, 2023 at 41,119 points, down by 623 points or 1.5%WoW.

The lackluster performance during the week was despite the Supplementary Finance Bill presented to introduce PKR170 billion for mobilizing additional taxes—in line with the IMF’s conditions under the 9th review.

Foreign exchange reserves of the country inched higher by US$276 million to US$3.2 billion during the week, still the import cover remained below one month.

PKR gained 2.5% of its value against the greenback.

Participation in the market declined, with daily trading volume averaging at 153.91 million shares as compared to 284.07 million shares in the earlier week depicting a decline of 45.8%WoW.

Other major news flows during the week included:  1) Tax target raised to PKR7.64 trillion, 2) Debt, liabilities rose to historical-level of PKR63.9 trillion, 3) gas tariff  increased by 16.6% to 124% for different types of consumers, 4) July-December 2022 LSMI output declined by 3.68%, 5) monthly remittances slipped below US$2 billion, 6) Fitch downgraded Pakistan rating on worsening liquidity, policy risks, and 7) car sales plunged 65% in January 2023.

Top performing sectors were: Leasing Companies, Leather and tanneries, and Sugar and Allied industries, while the least favorite sectors were: Textile Weaving, Tobacco, Miscellaneous, and Pharmaceuticals.

Stock-wise, top performers were: PGLC, THALL, FABL, JVDC, and GHGL, while laggards were: PAKT, MUGHAL, KTML, and PSEL.

Flow wise, companies were the major buyers with net buy of US$4.12 million, followed by Banks/DFI US$2.3 million, while mutual funds were major sellers, with a net sell of US$6.11 million.

Any news regarding a successful Staff Level Agreement with the IMF would lead to euphoria in the market, with the GoP having already introduced the PKR170 billion additional taxation measures demanded by the international lender.

The market may remain jittery in the near future due to higher inflation readings, weakness in the PKR and the effects of the hike in utility tariffs. This has led to expectations of further hikes in interest rates in the country, which has the potential to continue to keep the market range-bound.

Analysts continue to advocate scrips that have dollar-denominated revenue streams to hedge against the currency risk, which include the Technology and E&P sectors.

US trying to woo India away from Russia

The United States brought its most advanced fighter jet, the F-35, to India for the first time this week alongside F-16s, Super Hornets and B-1B bombers as Washington looks to woo New Delhi away from its traditional military supplier, Russia, reports Reuters.

India, desperate to modernize its largely Soviet-era fighter jet fleet to boost its air power, is concerned about Russian supply delays due to the Ukraine war and faces pressure from the West to distance itself from Moscow.

The American delegation to the week-long Aero India show in Bengaluru, which ended on Friday, is the biggest in the 27-year history of the show and underlines the growing strategic relationship between the United States and India.

In contrast, Russia, India's largest weapons supplier since the Soviet Union days, had a nominal presence. Its state-owned weapons exporter Rosoboronexport had a joint stall with United Aircraft and Almaz-Antey, displaying miniature models of aircraft, trucks, radars and tanks.

At previous editions of the show, Rosoboronexport had a more central position for its stall, although Russia has not brought a fighter jet to Bengaluru for a decade after India began considering more European and US fighter jets.

Boeing F/A-18 Super Hornets have already entered the race to supply fighter jets for the Indian Navy's second aircraft carrier and Lockheed Martin's F-21, an upgraded F-16 designed for India unveiled at Aero India in 2019, are also being offered to the air force.

A US$20 billion air force proposal to buy 114 multi-role fighter aircraft has been pending for five years, brought into sharp focus by tensions with China and Pakistan.

The F-35 is not being considered by India as of now, according to an Indian Air Force (IAF) source, but the display of two F-35s at Aero India for the first time was a sign of New Delhi's growing strategic importance to Washington.

It was not a sales pitch but rather a signal to the importance of the bilateral defence relationship in the Indo-Pacific region, said Angad Singh, an independent defence analyst.

"Even if weapons sales aren't the cornerstone of the relationship, there is a cooperation and collaboration at the military level between India and the US," he added.

The United States is selective about which countries it allows to buy the F-35. When asked if it would be offered to India, Rear Admiral Michael L. Baker, defence attache at the US embassy in India, said New Delhi was in the very early stages of considering whether it wanted the plane.

Ahead of the show, Russian state news agencies reported that Moscow had supplied New Delhi with around US$13 billion of arms in the past five years and had placed orders for US$10 billion.

The United States has approved arms sales worth more than US$6 billion to India in the last six years, including transport aircraft, Apache, Chinook and MH-60 helicopters, missiles, air defence systems, naval guns and P-8I Poseidon surveillance aircraft.

India also wants to manufacture more defence equipment at home in collaboration with global giants, first to meet its own needs and eventually to export sophisticated weapons platforms.

 

US to become world's largest LNG exporter

At least three proposed US liquefied natural gas (LNG) export plants have likely found enough customers to receive financial approvals this year, according to Reuters - developments that would make the country the world's largest LNG exporter for years to come.

After a dearth of plant approvals last decade, developers have secured dozens of long-term contracts to finance new multibillion dollar LNG plants. The pace of approvals has accelerated as Europe has shifted away from Russian gas since Moscow's invasion of Ukraine.

About a dozen developers hope to make final investment decisions this year. Many of these projects have been delayed several times, but analysts said at least three have secured enough customers to move ahead soon.

The United States was long an importer of LNG, but natural gas discoveries and production from the shale revolution flipped the country into an LNG exporter in 2016.

United States LNG exports hit 10.6 billion cubic feet per day (bcfd) in 2022, making the country the second biggest LNG exporter after Australia.

Projects best positioned to move ahead include Sempra Energy's Port Arthur plant in Texas, Energy Transfer LP's Lake Charles in Louisiana and NextDecade Corp's Rio Grande in Texas.

They have all or most of the long-term LNG sales agreements needed to convince bank's that the projects are ready for debt financing, say analysts.

Sempra said in January it has sold all the capacity needed to advance the first phase of Port Arthur. Buyers include Poland's Polski Koncern Naftowy Orlen SA, US oil producer ConocoPhillips and Germany's RWE AG.

NextDecade has signed deals for about 64% of the first phase of Rio Grande and may soon push it to about 87%, according to analysts at Morgan Stanley. Rio Grande's customers include Exxon Mobil Corp, Shell, Portugal's Galp Energia and Japan's Itochu Corp.

NextDecade could secure a financial go-ahead in the second half of this year, Morgan Stanley said. NextDecade has said that it was targeting a first-quarter FID for the project's first phase.

Energy Transfer signaled on Wednesday it might miss its first-quarter target for a FID due to extreme competition for LNG buyers. It has deals to sell LNG to several firms, including Shell, China's ENN Group and Swiss commodity trader Gunvor.

It takes roughly four years to build these giant plants, so their LNG is not likely to reach markets before 2027. But their production volumes will allow the United States to remain ahead of output from Australia and Qatar.

The United States already has the capacity to produce the most LNG in the world and would have been the biggest exporter if not for the shutdown of Freeport LNG's plant in Texas after a fire in June 2022.

"The United States still sits atop the ranking of global LNG supply additions through 2030 ... followed by Qatar, Mozambique, and Canada," analysts at energy consultancy Tudor Pickering Holt & Co said in a note.

The United States should export around 11.8 bcfd this year and 12.6 bcfd next, estimates the US Energy Information Administration.

The seven US export plants already in service, including Freeport LNG, can turn about 13.8 billion cubic feet of gas into LNG each day.

The next United States LNG plants expected to open are the QatarEnergy-Exxon joint venture at Golden Pass in Texas in late 2024, the first phase of Venture Global LNG's Plaquemines in Louisiana in 2024-2026, and Cheniere Energy Inc's expansion at its Corpus Christi plant in Texas in 2025.

 

Bangladesh succumbs to US pressure and bars Russian ships entering its maritime territory

The Bangladesh government has imposed restrictions barring the entry of 69 Russian ships into its maritime waters in line with US and EU sanctions.

This means that Russian vessels will not be able to bring in shipments of imports, stop for fueling, anchor in the area, or even use sea routes.

The government has sent notices to the relevant ministries, agencies, ports, shipping services, and international organizations regarding the new restrictions.

As a result of these new sanctions, Bangladesh will find it difficult to conduct any trade with Russia.

Bangladesh’s most expensive mega project, the Rooppur nuclear power plant, is being built with the support of Russia. A significant portion of the equipment and materials for that project is imported from Russia. Recently, a shipment from Russia carrying materials for the project was barred from entering Bangladesh’s maritime boundary amid diplomatic pressure from the US.

The ship attempted to dock at India’s Haldia Port to deliver its shipment but was turned away there too. It eventually returned to Russia with its cargo.

“At the request of the Ministry of Foreign Affairs, the 69 vessels from Russia which were embargoed by the United States have been banned from entering ports in Bangladesh,” said Captain Sabbir Mahmood, registrar of Bangladesh ships at the Mercantile Marine Office, citing the content of the notice.

The ban covers a wide range of ships, including oil tankers and cargo vessels, operated by seven companies. The restrictions mean that no import or shipping agents can import goods from any country using these Russian ships.

“The ban on ships bearing the Russian flag was jointly imposed by the United States and the European Union,” said Azam J Chowdhury, chairman of the Bangladesh Ocean Going Shipowners Association, or BOGSA. “If any product comes to Bangladesh on these ships, then Bangladesh will also be added to the ban. The bulk of our international trade is with the EU and the US.”

The sanctions were imposed due to Russia’s ongoing invasion of Ukraine.

“As such, we believe that in the overall assessment of the interests of Bangladeshi businesses, the Russia situation will not significantly impact the transportation of goods for global trade.”

Bangladesh has 197 ships that travel in the deep sea, accounting for less than 10 percent of the country’s total trade in international goods.

If Bangladesh businesses stay abreast of the situation, the ban should not have a significant impact on shipping or costs, the BOGSA chief said.

However, some import agents who have had long working relationships with these Russian vessels may be impacted, Azam noted.

Russia is not on the list of the top 20 countries that Bangladesh trades with, according to data from Bangladesh Bank. Nearly 87 percent of all imports come from those countries.

Bangladesh mainly imports wheat and petroleum products from Russia and exports garments to the country.

 

Pakistan: Imposition of additional taxes may lure IMF, but plunge the country deeper in debt trap

After reading the details of mini budget, it may be said that the incumbent government may have succeeded in convincing the International Monetary Fund (IMF) to release a paltry amount. However, the measures would further weaken the already feeble economy. On top of all the fear of default will continue to haunt.

Finance Minister, Ishaq Dar presented the proposal to both the houses to impose additional taxation measures of PKR170 billion. These measures address only one deficit, budget deficit. No measures have been introduced to bridge the current account deficit or improve debt payment capacity of the country.

The release of around US$ one billion by the IMF may pave the way for seeking loans from other lenders, but in no way help in generating additional dollars to boost the foreign exchange reserves of Pakistan.

While the imports are likely to become more expensive, especially after the depreciation of Pak rupee, no measures have been introduced to enhance competitiveness of the Pakistani exporters.

Hike in interest rate, electricity and gas tariffs, sales tax and Federal Excise Duty will collectively increase prices of goods for the consumers and fuel inflation.

In aggregate cost of doing business will be increased and local manufacturers will witness erosion in competitiveness in the global markets.