National Refinery stops supplying fuel to Pakistan State Oil Company

According to media reports, National Refinery (NRL) has decided to halt supplies to Pakistan State Oil Company (PSO) after the state-owned oil marketing company stopped the payments to the refinery.

PSO has been suffering from a severe financial crisis due to lack of payments from various sectors on account of supply of petroleum products. Currently, the PSO owes National Refinery PKR 3.469 billion.

PSO stopped the payments of refineries a couple of days back. These refineries are the suppliers of diesel, petrol, aviation fuel, furnace oil etc. to the state-owned company, having the largest share in the sales of petroleum products in the country.

“NRL has decided to halt the supply to PSO after the stoppage of payment and intimated the OMC in written,” said sources familiar to the development. They added, NRL was the first and other refineries might follow suit.

PSO has been entangled in financial woes for the last many years, but in recent months the situation has aggravated immensely as its inter-corporate debt has increased to PKR1,024 billion with receivables at PKR762.653 billion and payables at PKR261.155 billion.

The breakup of the PSO payments to the local refineries showed that it has to pay PKR25 billion to Pak-Arab Refinery Company (PARCO), PKR10 billion to Pakistan Refinery (PRL), PKR3.469 billion to National Refinery, PKR9.049 billion to Attock Refinery (ARL), and PKR4.108 billion to Cnergyico.

Details of the company’s receivables show that the Sui Northern Gas Pipelines (SNGPL) has so far emerged as the biggest defaulter of Pakistan State Oil.

The SNGPL owes PSO PKR492.102 billion as of March 08, 2023.

The power sector continues to haunt the state-owned oil marketing company as it is required to PKR Rs178 billion followed by Pakistan International Airlines (PIA) and the government of Pakistan, which owe PSO PKR92.5 billion.

The most crucial payment of PKR124.666 billion in the head of LPS (late payment surcharge) is also part of the total receivables that have soared to PKR762.653 billion.

 

OPEC+ terms oil price drop financially driven

OPEC Plus attributes this week's slide in oil prices to a more than one-year low to be driven by financial fears, not any imbalance between demand and supply, and expects the market to stabilize, four delegates from the oil producer group told Reuters.

Oil sank to a 15-month low on Wednesday, with Brent crude below US$72 a barrel, on concerns about contagion from a banking crisis. Crude stabilized on Thursday after Credit Suisse was thrown a financial lifeline by Swiss regulators.

"It's purely financially driven and has nothing to with the demand and supply of oil," one of the delegates said, asking not to be named. OPEC Plus is most likely ‘wait and see’ in expectation that the situation will normalize soon.

Three other delegates from the OPEC+ Plus producer group comprising the Organization of the Petroleum Exporting Countries (OPEC), Russia and other allies, made similar remarks.

The comments will dampen any speculation that OPEC Plus is concerned about weakening prices and might consider further steps to support the market. The group's next policy meeting is not until June, though an advisory panel of key ministers meets on April 03.

One of the delegates said OPEC's latest monthly oil market report, released on Tuesday with an upgraded demand forecast for China, pointed to a sound balance between supply and demand.

"We are focusing on market fundamentals," another of the sources said.

Last November, with prices weakening, OPEC Plus reduced its output target by 2 million bpd - the largest cut since the early days of the COVID-19 pandemic in 2020. The same reduction applies for the whole of 2023.

Ministers from Algeria and Kuwait this week praised the decision and Saudi Arabia's energy minister told Energy Intelligence that OPEC Plus will stick to the reduced target until the end of the year.

Credit Suisse sued by US shareholders

US shareholders of Credit Suisse Group AG sued the Swiss bank on Thursday, claiming that the bank defrauded them by concealing problems with its finances.

The proposed class action accuses Credit Suisse of deceiving investors by failing to disclose that it was suffering from significant customer outflows, and that it had material weaknesses in its internal controls over financial reporting.

Shareholders led by Braden Turner said that as the truth became known, and Credit Suisse's largest shareholder said it would not put more money into the bank, investors fled, causing losses as Credit Suisse's stock price sank to a record low.

The lawsuit appears to be the first by US investors over recent problems at Credit Suisse, which regained some market confidence on Thursday after securing a lifeline to borrow up to US$54 billion from Switzerland's central bank.

Credit Suisse declined to comment on the lawsuit, which was filed in federal court in Camden, New Jersey. Chief Executive Ulrich Koerner and Chair Axel Lehmann are among the other defendants.

Turner, the named plaintiff, sued on behalf of holders of Credit Suisse's American depositary shares from March 10, 2022, to March 15, 2023.

The law firm representing Turner was also first to file shareholder lawsuits against Silicon Valley Bank parent SVB Financial Group and Signature Bank. Regulators seized both of those banks within the last week.

Credit Suisse's largest shareholder is Saudi National Bank. The Saudi bank's chairman said in a TV interview on Wednesday that regulatory issues were the main reason it would not add to its 9.9% Credit Suisse stake.

 

China, Russia and Iran launch navy drills in Gulf of Oman

According to South China Morning Post, China, Russia and Iran launched joint naval exercises in the Gulf of Oman on Wednesday, as rival power the United States hosts the Middle East’s largest maritime drills nearby.

The joint naval manoeuvres with Iran and Russia will run until Sunday, China’s Ministry of Defence said, adding they will help deepen practical cooperation among the navies of participating countries.

Officially named Security Bond-2023, the exercise has been developed from similar training carried out by the three countries in 2019 and 2022, and will include aerial search operations, sea rescue and fleet formation exercises, as well as other tasks, the ministry statement said.

The statement also said other countries are involved but did not give details.

The Security Bond drills coincide with the last leg of the 18-day International Maritime Exercise 2023, which kicked off on March 02 at the US 5th Fleet’s headquarters in Bahrain.

The eighth edition of the US-led event since it was set up in 2012 involves 50 countries and international agencies – including France, Pakistan, Egypt, Saudi Arabia, Nato and Interpol.

“The Security Bond exercise will help demonstrate the will and capability of the participating countries to jointly safeguard maritime security and actively build a community of shared future for the sea, and inject positive energy into regional peace and stability,” the statement from Beijing said.

China has sent its South Sea Fleet warship, the Nanning, to take part in the drills. The type 052D destroyer has been dubbed the Chinese Aegis as it is benchmarked against the US Navy’s Arleigh Burke-class Aegis destroyers.

The 7,500-tonne Nanning is equipped with advanced integrated radar, and a 64-cell vertical launch system for a variety of air defence, land attack, anti-ship and anti-submarine missiles.

In January, the Nanning was dispatched to missions in the Indian Ocean, and then participated in the Pakistan-led multinational Arabian Sea naval exercise AMAN-23 and the International Defence Exhibition in Abu Dhabi last month.

According to a US Navy statement, this year’s IMX involves 7,000 personnel, 35 ships, and 30 unmanned and artificial intelligence systems from the participating nations and international bodies.

he exercise spans the Arabian Sea, Gulf of Oman, Gulf of Aden, Red Sea, Indian Ocean and East African coastal regions, and is expected to wind up by March 20.

The Gulf of Oman in the northwestern Indian Ocean is a key transit point for international energy shipments, connecting the Arabian Sea to the Strait of Hormuz, which leads to major oil producing nations including Iran and Saudi Arabia.

China, Russia and Iran each have various degrees of tension with the US. Beijing, meanwhile has expanded its influence and presence in the Middle East in recent years as it presents itself as a global leadership alternative to Washington

Last week, it brokered a surprise deal for long-time rivals Iran and Saudi Arabia to resume diplomatic ties after seven years, raising hopes of a lasting peace in the Middle East and highlighting China’s role as a global mediator.

Beijing is also a close partner of Moscow, and has been criticized by the US and its allies for refusing to condemn the Russian invasion of Ukraine.

China has said it will keep pushing for peace talks and President Xi Japing is expected to visit Russia in the coming weeks.

 

No White House visit for Netanyahu

Eleven weeks into his third term as Israel's prime minister, Benjamin Netanyahu has yet to be received at the White House, signaling apparent US unhappiness over the policies of his right-wing government.

Most new Israeli leaders had visited the United States or met the president by this point in their premierships, according to a Reuters review of official visits going back to the late 1970s. Only two out of 13 previous prime ministers heading a new government waited longer.

The White House declined to confirm Netanyahu has yet to be invited. A State Department spokesperson referred Reuters to the Israeli government for information about the prime minister's travel plans.

Israel’s embassy in Washington declined to comment.

"The message they clearly want to send is, if you pursue objectionable policies, there's no entitlement to the Oval Office sit-down,” said David Makovsky, a former senior adviser to the Special Envoy for Israeli-Palestinian Negotiations, now at the Washington Institute for Near East Policy.

Since the start of the year, demonstrators have filled Israel's streets to protest the government's plan to curb the power of the Supreme Court, which critics say removes a check on the governing coalition.

Amid escalating West Bank violence, the right-wing government's action authorizing settler outposts and inflammatory comments from a member of Netanyahu's cabinet with responsibilities over Jewish settlements have drawn criticism from US officials, including from Defense Secretary Lloyd Austin during a visit to Israel last week.

US-Israeli ties remain close. The United States has long been Israel’s main benefactor, sending more than US$3 billion each year in military assistance.

President Joe Biden has known Netanyahu for decades, the two have spoken by phone, and senior officials in both countries have made visits since Netanyahu's government was formed in December 2023, despite Israel's spiraling political crisis.

But the lack of a White House visit underscores both the desire of the Biden administration to see different policies in Israel and what critics say is a reluctance to take more forceful steps.

US statements on events in Israel have often comprised “frustrating boiler-plate language,” said Sarah Yerkes, a senior fellow at the Carnegie Endowment for International Peace who formerly worked at the State Department on policy towards Israel and the Palestinians.

“It has been frustrating to see this lack of teeth to any of the US responses,” Yerkes said.

“They don't get to be treated with the same kid gloves that they've always been treated with because ... they’re on the path to not being a democracy anymore.”

The Biden administration prefers quiet conversations over public criticism, a senior State Department official said, especially when it comes to the crisis over a proposed Israeli judicial overhaul.

“Anything that we would say on the specific proposals has the potential to be deeply counterproductive,” the official said, adding the goal was to encourage Israel’s leaders to build consensus over the reforms, rather than to be prescriptive on what the outcome should be.

Chris Murphy, a Democratic member of the Senate Foreign Relations Committee, said he hopes the administration will persist with a clear message to Israel.

"I would certainly like to see the administration to be sending a strong signal that we have to maintain our support for a future Palestinian state and the decisions that the Netanyahu government are making now greatly compromise that future," Murphy said.

A separate group of 92 progressive lawmakers warned in a letter to Biden that the judicial overhaul could empower those in Israel who favor annexing the West Bank, "undermining the prospects for a two-state solution and threatening Israel’s existence as a Jewish and democratic state.”

US leaders have rarely criticized Israeli policies since Secretary of State James Baker in 1989 advised the country against moves toward annexing Palestinian territory and expanding settlements. Baker later banned Netanyahu, at the time a deputy minister of foreign affairs, from the State Department after he criticized US policy toward Israel.

Biden, a Democrat who describes himself as a Zionist, says US support for Israel is ironclad.

“Biden’s own personal instincts are such that it’s very difficult for him to want to adopt an extremely tough posture towards Israel,” Dennis Ross, a veteran US Middle East peace negotiator now with the Washington Institute for Near East Policy.

“He would prefer to have the Middle East in a box so he can focus only on Russia, Ukraine and China. Unfortunately, the Middle East has a way of imposing itself, unless we initiate enough to try to manage the environment.”

 

 

Credit Suisse secures US$54 billion to prevent global bank crisis

Credit Suisse on Thursday said it would borrow up to US$54 billion from the Swiss central bank to shore up its liquidity and investor confidence after a slump in its shares intensified fears about a global financial crisis.

The Swiss bank's announcement helped stem heavy selling in financial markets in Asian morning trade on Thursday, following torrid sessions in Europe and the United States overnight as investors fretted about a run on global bank deposits.

In its statement early Thursday, Credit Suisse said it would exercise its option to borrow from the Swiss National Bank up to 50 billion Swiss francs (US$54 billion). That followed assurances from authorities in the private banking hub on Wednesday that Credit Suisse met the capital and liquidity requirements imposed on systemically important banks and that it could access central bank liquidity if needed.

Credit Suisse is the first major global bank to be given such a lifeline since the 2008 financial crisis - though central banks have extended liquidity more generally to banks during times of market stress including the coronavirus pandemic.

Asian stocks were hit by Wall Street's tumble on Thursday and investors bought gold, bonds and the dollar. While the bank's announcement helped trim some of those losses, trade was volatile and sentiment fragile.

"It does help. It removes an immediate risk. But it confronts us with another choice. The more we do this, the more we blunt monetary policy, the more we have to live with higher inflation -- and what is it going to be?" said Damien Boey, Chief Equity Strategist at Barrenjoey in Sydney.

"Do bailouts make things better? On the one hand, you are removing a source of risk to the markets which is a clear and present danger. On the other hand we are feeding into this paradigm of monetary policy bucking within itself."

The Swiss bank's problems have shifted the focus for investors and regulators from the United States to Europe, where Credit Suisse led a selloff in bank shares after its largest investor said it could not provide more financial assistance because of regulatory constraints.

The concerns about Credit Suisse added to broader banking sector fears sparked by last week's collapse of Silicon Valley Bank and Signature Bank, two US mid-size firms.

Credit Suisse's borrowing will be made under the covered loan facility and a short-term liquidity facility, fully collateralized by high quality assets. It also announced offers for senior debt securities for cash of up to 3 billion francs.

"This additional liquidity would support Credit Suisse’s core businesses and clients as Credit Suisse takes the necessary steps to create a simpler and more focused bank built around client needs," the bank said.

Investor focus is also on any action by central banks and other regulators elsewhere to restore confidence in the banking system as well as any exposure businesses may have to Credit Suisse.

SVB's demise last week, followed by that of Signature Bank two days later, sent global bank stocks on a roller-coaster ride this week, with investors discounting  assurances from US President Joe Biden and emergency steps giving banks access to more funding.

FINMA and the Swiss central bank said there were no indications of a direct risk of contagion for Swiss institutions from US banking market turmoil.

On Wednesday, Credit Suisse shares led a 7% fall in the European banking index, while five-year credit default swaps (CADS) for the flagship Swiss bank hit a new record high.

The investor exit for the doors prompted fears of a broader threat to the financial system, and two supervisory sources told Reuters that the European Central Bank had contacted banks on its watch to quiz them about their exposures to Credit Suisse.

The US Treasury also said it is monitoring the situation around Credit Suisse and is in touch with global counterparts, a Treasury spokesperson said.

Rapid rises in interest rates have made it harder for some businesses to pay back or service loans, increasing the chances of losses for lenders who are also worried about a recession.

Traders are now betting that the Federal Reserve, which just last week was expected to accelerate its interest-rate-hike campaign in the face of persistent inflation, may be forced to hit pause and even reverse course.

Bets on a large European Central Bank interest-rate hike at Thursday's meeting also evaporated quickly as the Credit Suisse rout fanned fears about the health of Europe's banking sector. Money market pricing suggested traders now saw less than a 20% chance of a 50 basis point rate hike at the ECB meeting.

Unease sparked by SVP's demise has also prompted depositors to seek out new homes for their cash.

Ralph Hammers, CEO of Credit Suisse rival UBS said market turmoil has steered more money its way and Deutsche Bank CEO Christian Sewing said that the German lender has also seen incoming deposits.

 

 

 

Five key takeaways from the Russian jet-US drone incident

Two Russian jets sparked the latest diplomatic crisis between Moscow and Washington on Tuesday when they forced down an unmanned American aircraft into the Black Sea.

The White House blasted the incident as unsafe and reckless, while Russia has downplayed the event, even accusing the US of provocative drone flights approaching Russian territory.

Charles Kupchan, a senior fellow with the Council on Foreign Relations, called it an extraordinary and worrying clash between Russia and the Western security alliance NATO.

“Whatever the intent of the Russians, this is a very dangerous situation,” he said. “On a daily basis we have Russian weapons and aircraft and personnel in close proximity to NATO territory, NATO personnel, NATO platforms. And so the risk of escalation is significant.”

Here are five key takeaways from the downed drone.

Airspace interceptions aren’t new, but this was rare

The US intercepts Russian fighter jets several times a year in the Air Defense Identification Zone that covers international airspace outside of the US and Canada. That includes the interception of four Russian fighter jets near Alaska last month.

There have also been interceptions of US and NATO aircraft by Russian planes in the Black Sea in recent years. But the drone attack was particularly concerning for Washington, which said the MQ-9 Reaper drone was flanked by two Russian jets before one Russian jet dumped fuel on the drone.

A Russian jet then damaged the propeller of the drone and forced it down into the Black Sea.

National Security Council spokesperson John Kirby said the attack of a US drone was especially alarming compared to previous interceptions.

“This one obviously is noteworthy because of how unsafe and unprofessional it was,” Kirby told reporters on Tuesday.

Neither the US nor Russia has recovered the drone

The $32 million dollar drone may never be recovered.

Speaking to CNN on Wednesday, Kirby said the drone plunged into very deep water, and US officials are determining whether recovery efforts are possible.

But Russia is pushing forward to recover the aircraft, according to Nikolai Patrushev, the secretary of Russia’s Security Council.

“I don’t know if we can recover them or not, but we will certainly have to do that, and we will deal with it,” Patrushev said on Russian television Wednesday, according to The Associated Press.

Kirby said the US has taken steps to protect the information and data the drone has to limit intelligence collection from Russia.

Russia accuses US of provocation

Russia claims the US drone maneuvered sharply and crashed into the Black Sea on its own.

The Russian Defense Ministry also slammed the US for operating near the region of Crimea, which Moscow illegally annexed from Ukraine in 2014 — but which the US refused to recognize as Russian territory.

Russian Ambassador to the US Anatoly Antonov told reporters Tuesday, after being summoned to the State Department, that the drone was moving deliberately and provocatively towards the Russian territory.

“The unacceptable actions of the United States military in the close proximity to our borders are cause for concern,” Antonov said. “We are well aware of the missions such reconnaissance and strike drones are used for.”

US says it will continue patrols

The US has operated reconnaissance missions over the Black Sea for more than a year, predating Russia’s invasion of Ukraine.

Defense Secretary Lloyd Austin said the US will not be deterred by the incident.

“Make no mistake, the United States will continue to fly and to operate wherever international law allows,” Austin said on Wednesday.

Fears of escalation persist

Tensions between the US and Russia have reached the highest point since the Cold War, rising after Russia’s invasion of Crimea in 2014, escalating further after Russia’s interference in the 2016 election and then skyrocketing after Moscow’s full invasion of Ukraine last year.

The US and Russia maintain a crisis communication line to deal with incidents such as the drone attack, but Moscow has not picked up the phone at some critical moments during the war in Ukraine.

Kremlin spokesman Dmitry Peskov on Wednesday  described the relationship between Moscow and Washington as at its lowest point, although he said Russia would continue to engage in diplomacy.

“Russia has never rejected a constructive dialogue, and it’s not rejecting it now,” Peskov said.