Ukraine furious over Russian UN Security Council presidency

Russia, whose leader is accused of war crimes, assumed charge of the United Nations Security Council on Saturday causing fury in Ukraine, with President Volodymyr Zelenskiy calling it an absurd and destructive move.

The last time Russia held the rotating presidency of the body responsible for maintaining peace and combating acts of international aggression was in February 2022 when Moscow troops launched a full-scale invasion of Ukraine.

The United States on Thursday urged Russia to conduct itself professionally when it assumes the role, saying there was no means to block Moscow from the post.

In March, the International Criminal Court (ICC) - an international justice body not associated with the UN - issued an arrest warrant for President Vladimir Putin and his commissioner for children rights, accusing them of the war crime of illegally deporting hundreds of children from Ukraine.

Ukraine's Foreign Minister Dmytro Kuleba called Russia's presidency of the Security Council a "slap in the face to the international community." Zelenskiy said it was time for a general overhaul of global institutions, including the Security Council.

"Reform is obviously necessary to prevent a terrorist state - and any other state that wants to be a terrorist - from destroying the peace," he said.

Some 400 days into the war, which has killed thousands, destroyed Ukrainian cities and set millions of civilians to flight, Russia continues to take over parts of the country, pressing on with its assault in the east.

Earlier, Zelenskiy advisor Andriy Yermak also hit out at Iran, which Kyiv and its allies accuse of supplying Russia with arms. Tehran denies it is giving weapons to Russia.

"It is very telling that on the holiday of one terror state – Iran - another terror state – Russia – begins to preside over the UN Security Council," Yermak wrote on Twitter, referring to Iran's Islamic Republic Day holiday.

Brazil-China to trade in their own currencies

Brazil and China have reportedly struck a deal to ditch the US dollar in favor of their own currencies in trade transactions. 

The deal, announced on Wednesday, will enable China and Brazil to carry out trade and financial transactions directly, exchanging yuan for reais – or vice versa – rather than first converting their currencies to the US dollar, Fox Business reported.  

The Brazilian Trade and Investment Promotion Agency (ApexBrasil) said the new arrangement is expected to reduce costs and promote even greater bilateral trade and facilitate investment. 

China is Brazil’s largest trading partner, accounting for more than a fifth of all imports, followed by the United States, according to the latest figures.

China is also Brazil’s largest export market, accounting for more than a third of all exports. 

China overtook the United States as Brazil’s top trading partner in 2009. Today, Brazil is the largest recipient of Chinese investment in Latin America, driven by spending on high-tension electricity transmission lines and oil extraction. 

Officials from both countries reached a preliminary agreement to ditch the US dollar in January and the deal was announced after a high-level China-Brazil business form in Beijing. 

Brazilian President Luiz da Silva, who took office in January, has moved to strengthen ties with Beijing after a period of rocky relations under his predecessor, Jair Bolsonaro, who used anti-China rhetoric on the campaign trail and in office. 

Brazil’s leftist president was scheduled to visit Beijing last weekend by had to cancel his trip after contracting pneumonia. A delegation composed of ministers, senators, lawmakers, and hundreds of businesspeople – including more than 100 from the agricultural sector – had been set to accompany Lula during his first state visit since taking office. 

United States oil and gas rigs count witnesses first quarterly fall since 2020

The United States energy firms this week cut the number of oil and natural gas rigs, with the quarterly count dropping for the first time since 2020, energy services firm Baker Hughes said in its closely followed report on Friday.

The oil and gas rig count, an early indicator of future output, fell by three to 755 in the week ended March 31, 2023. Despite this week's rig decline, Baker Hughes said the total count was still up 82 rigs, or 12%, over this time last year.

US oil rigs fell one to 592 this week, while gas rigs decreased two to 160.

For the month, the total oil and gas rig count rose two rigs, the first monthly increase since November last year.

For the quarter, the total oil and gas rig count fell by 24 rigs, the first quarterly decline since the third quarter of 2020.

US oil futures were down about 6% so far this year after gaining about 7% in 2022. US gas futures have plunged about 51% so far this year after rising about 20% last year.

The drop in gas prices has already caused some exploration and production companies, including Chesapeake Energy, Southwestern Energy and Comstock Resources, to announce plans to reduce production by cutting some gas rigs.

US field production of crude oil rose in January 2023 to 12.46 million barrels per day (bpd), the highest since March 2020, Energy Information Administration (EIA) data shows.

Gross natural gas production in the US Lower 48 states jumped by 2.9 billion cubic feet per day (bcfd) to 112.3 bcfd in January, the most since hitting a record 112.4 bcfd in November 2022, the EIA said.

IMF approves US$15.6 billion loan for Ukraine

The International Monetary Fund said on Friday its executive board approved a four-year US$15.6 billion loan program for Ukraine.

The decision clears the way for an immediate disbursement of about US$2.7 billion to Kyiv, and requires Ukraine to carry out ambitious reforms, especially in the energy sector, the Fund said in a statement.

The Extended Fund Facility (EFF) loan is the first major conventional financing program approved by the IMF for a country involved in a large-scale war.

Ukraine's previous, US$5 billion long-term IMF program was canceled in March 2022 when the fund provided US$1.4 billion in emergency financing with few conditions. It provided another US$1.3 billion under a "food shock window" program last October.

Ukraine must meet certain conditions over the next two years, including steps to boost tax revenue, maintain exchange rate stability, preserve central bank independence and strengthen anti-corruption efforts.

Deeper reforms will be required in the second phase of the program to enhance stability and early post-war reconstruction, returning to pre-war fiscal and monetary policy frameworks, boosting competitiveness and addressing energy sector vulnerabilities, the IMF said.

A senior US Treasury official said the program was really solid and included commitments from Ukrainian authorities to achieve 19 structural benchmarks over the next year alone.

IMF First Deputy Managing Director Gita Gopinath said the program faced exceptionally high risks, and its success depended on the size, composition and timing of external financing to help close fiscal and external financing gaps and restore Ukraine's debt sustainability.

The decision formalizes an IMF staff-level agreement reached with Ukraine on March 21 that takes into consideration Ukraine's path to accession to the European Union after the war.

Ukrainian President Volodymyr Zelenskiy welcomed the new funding.

"It is an important help in our fight against Russian aggression," he said on Twitter. "Together we support the Ukrainian economy. And we are moving forward to victory!"

US Treasury Secretary Janet Yellen, who pushed hard for the past year to secure the IMF funding package and paid a surprise visit to Ukraine in February, said the package would help secure the country's economic and financial stability and set the foundation for long-term reconstruction.

"I call on all other official and private creditors to join this initiative to assist Ukraine as it defends itself from Russia’s unprovoked war," she said in a statement. "The United States will continue to stand by Ukraine and its people for as long as it takes."

The IMF said international financial institutions, private-sector firms, and most of Ukraine's official bilateral creditors and donors backed a two-step debt treatment process for Ukraine that includes adequate financing assurances on debt relief and concessional financing during and after the program.

The broad support reassured the IMF, the senior Treasury official said, adding, “That was really helpful for them to see that we really mean to be there for the long haul."

LONGER WAR SCENARIO

IMF official Gavin Gray told reporters the fund's baseline scenario assumed the war would wind down in mid-2024, resulting in the projected financing gap of $115 billion, which would be covered by the multilateral and bilateral donors and creditors.

The fund's "downside scenario" saw the war continuing through the end of 2025, opening a much larger $140 billion financing gap that would require donors to dig deeper, he said.

Gray said the program had been designed to function, even if economic circumstances were "considerably worse" than the baseline. He said the countries providing financing assurances had agreed to work with the IMF to ensure Ukraine was able to service its debt to the IMF if larger sums if needed.

Ukraine will face quarterly reviews beginning as early as June, he said.

 

 

  

Ramadan brings Saudi, Irani envoys closer

Preparations are underway to hold the meeting between Saudi Foreign Minister Prince Faisal bin Farhan and his Iranian counterpart Hussein Amir Abdollahian this Ramadan, following the announcement of the resumption of diplomatic relations between the two countries on March 10.

The signing of the agreement and the phone calls brought in a friendly atmosphere among members of the diplomatic corps of the two countries all over the world. The month of Ramadan witnessed the meeting of the ambassadors of the two countries in Iraq and Norway for Iftar banquets, which confirms the progress in activating the Beijing agreement and the return of relations to normal.

Saudi Ambassador to Iraq Abdulaziz Al-Shammari attended an Iftar banquet hosted by the Iranian Ambassador in Baghdad Muhammad Al-Sadiq on Tuesday. A number of ambassadors accredited to the Iraqi capital also attended the Iftar.

On her part, Saudi Ambassador to Norway Amal Yahya Al-Moallimi hosted the annual Ramadan Iftar banquet in the presence of the Iranian Ambassador Ali Reza Yousefi, along with the heads of Arab and Islamic diplomatic missions accredited to Norway.

The Iranian ambassador said in a statement on his Twitter account that it was a pleasure to participate in the Iftar party of Saudi Ambassador Al-Moallimi at her residence. The recent agreement opened a new chapter in the friendly relations between Iran and Saudi Arabia.

The first meeting between the foreign ministers of the two countries is expected to take place in the Iraqi capital Baghdad, which hosted meetings and dialogues between the two sides last year, or the Omani capital Muscat, which also hosted rounds of Saudi-Iranian talks.

There is also a possibility of hosting the historic meeting in the Chinese capital Beijing in view of its key role in turning the page on the differences between Tehran and Riyadh, and its brokering of the agreement to restore diplomatic relations that were severed in 2016.

Saudi Arabia, Iran and China reached an agreement in Beijing, which stipulates the resumption of diplomatic relations between Riyadh and Tehran and the reopening of their embassies and consulates within two months, according to a joint statement, issued after the signing of the Beijing deal.

 

US refiner seeks approval to import Venezuelan oil

Valero Energy Corp, the second-largest US oil refiner, is seeking Washington's permission to import Venezuelan crude, hoping for a repeat of the approval granted to Chevron Corp in November 2022 after a four-year ban.

President Joe Biden's administration has eased some US sanctions on the OPEC-member nation in an effort to encourage a political dialogue with the country's opposition. That has led to further pressure from US, European and Asian energy firms, but Washington has resisted any additional major steps for now.

Venezuelan oil resumed flowing to the US in January 2023 under a Treasury Department license granted to Chevron that allowed it to expand output there and export the oil. Refiners including Valero and Phillips 66 have bought cargoes from Chevron, according to US Customs and shipping data.

The Chevron decision came as part of negotiations for humanitarian aid and a presidential election. But efforts to fund the aid by releasing Venezuela's frozen money abroad have stalled and no new talks have been scheduled since that time.

Valero is asking the Treasury for a Chevron-style exemption from sanctions and allow it to directly purchase crude from Venezuela's state-run oil company PDVSA, said one of the sources, who is based in Washington.

No decision appears imminent, the source said, signaling that the US, for now, does not want to be seen further easing Venezuela sanctions until President Nicolas Maduro makes political concessions to Venezuela's opposition.

Before oil sanctions were imposed on PDVSA in 2019, Valero was among the US top three receivers of the South American country's crude through long-term supply contracts that have not expired.

A Valero spokesperson said the company has not contacted the US Treasury Department for permission to import Venezuelan oil.

"I am told that we have not applied for a license," said spokesperson Lillian Riojas.

PDVSA did not reply to requests for comment. The Treasury Department declined comment.

The U.S. has banned all cash payments to Maduro's administration under its easing of sanctions. Chevron's license - and approvals granted to European firms Eni and Repsol - allow only for oil or debt swaps.

"The United States provided targeted, time-limited sanctions relief to support efforts to restore democracy and alleviate the suffering of the Venezuelan people," said a spokesperson for the White House National Security Council, referring to the six-month license granted to Chevron in November.

"We have no new licenses to announce or preview," the spokesperson added.

Chevron's resumption of Venezuelan crude imports has not led to an increase in the country's overall exports this year, according to PDVSA schedules and Refinitiv Eikon data.

The No. 2 US oil company exported some 86,000 barrels per day of Venezuelan oil in February.

PDVSA's new boss Pedro Tellechea in January suspended most oil supply contracts while reviewing payments for past shipments.

The suspension has recently brought Venezuela's exports almost to a halt, with only four customers - Chevron, Iran, Cuba and Hangzhou Energy - authorized to lift cargoes.

The investigation into payments and disclosure of US$21.2 billion in commercial accounts receivable since 2020 this month prompted the resignation of powerful Oil Minister Tareck El Aissami and the arrest of top PDVSA officials.

 

OPEC Plus likely to stick to its output quota

OPEC Plus is likely to stick to its existing deal to cut oil output at a meeting on Monday, five delegates from the producer group told Reuters, after oil prices recovered following a drop to 15-month lows.

Oil has recovered towards US$80 a barrel for Brent crude after falling to near US$70 on March 20, as fears ease about a global banking crisis and as a halt in exports from Iraq's Kurdistan region curbs supplies.

OPEC Plus, which comprises the Organization of the Petroleum Exporting Countries and allies led by Russia, is due to hold a virtual meeting of its ministerial monitoring panel, which includes Russia and Saudi Arabia, on Monday.

"It is hard to expect any new development," one of the delegates said of Monday's talks. Another said the Kurdistan curbs and recent price drops were not sufficiently important to affect the overall OPEC Plus policy path for 2023.

Three other OPEC Plus delegates also said any policy changes were unlikely on Monday. After those talks, the next full OPEC Plus meeting is not until June.

Falling oil prices are a problem for most OPEC Plus members because their economies rely heavily on oil revenue.

Even so, OPEC Plus delegates did not raise any suggestion of further action to support the market after the recent price drop and predicted prices would stabilize - which they have since shown signs of doing.

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

Saudi Arabia's energy minister has said OPEC Plus will stick to the reduced target until the end of the year.