Iran rejects signing interim pact with United States

According to reports, Iran and the United States are concluding an interim deal that calls for partial sanctions relief on the Islamic Republic in exchange for modifications to the nation’s nuclear energy program have been rejected by Iran's mission to the UN.

The London-based Middle East Eye (MEE) website purportedly said that both countries were close to reaching such an agreement despite the stalling of negotiations on the renewal of the Joint Comprehensive Plan of Action (JCPOA).

It cited two unnamed sources as saying Iran and the United States were nearing a temporary deal that would swap some sanctions relief for reducing Iranian uranium enrichment activities.

The MEE also cited the sources as saying the two sides have reached an agreement on a temporary deal to take to their respective superiors.

The report said Iran would commit to cease enriching uranium to purity of 60% or above and would continue cooperation with the UN nuclear watchdog in return for being allowed to export up to one million barrels of oil per day and gaining access to its income and other frozen funds abroad.

A White House National Security Council spokesperson also denied the MEE report on Thursday, labeling it false and misleading.

The spokesperson added, "Any reports of an interim deal are false."

According to National News, Iran's mission also said, "Our comment is the same as the White House comment."

Iran and a number of countries, including the United States, concluded an agreement known as the JCPOA in July 2015. The Islamic Republic was given a little amount of sanction relief as a result, and it subsequently offered to modify part of its nuclear activity. The agreement went into force in January 2016.

However, the United States withdrew from the agreement in 2018 under the administration of former President Donald Trump, reinstating all the sanctions that it had waived.

In April 2021, talks were resumed under Joe Biden’s presidency to renew the accord. However, since Washington has refused to provide assurances that it won’t back out of the pact again, the negotiations have been stalled since September 2022.

The Iranian mission to the UN stated that there is no interim agreement meant to replace the JCPOA and that no such agreement is on the table.

On Wednesday, Mohsen Naziri Asl, Iran’s permanent representative to the United Nations in Vienna, mentioned the U.S.’s self-proclaimed willingness to rejoin the JCPOA.

“Despite the arduous negotiations that lasted for more than 18 months, mainly due to the lack of American political will and determination, we could not bring the talks to a conclusion,” he added.

The talks to revive the JCPOA started in April 2021 and lasted until September 2022.

Naziri Asl described Iran’s recent cooperative efforts with the IAEA as constructive and logical, calling expectations from Iran unreasonable and illogical.

“Iran’s nuclear activities, including uranium enrichment at various levels, are completely peaceful and in accordance with the Iranian people’s rights based on the nuclear Non-Proliferation Treaty (NPT), and are under the supervision and verification of the IAEA safeguards,” the top diplomat emphasized.

According to the diplomat, the US government has lately emphasized in many occasions that reviving the JCPOA is not on the agenda for months, expressing concern that certain parties have turned a blind eye to the irresponsible attitude, and are even aligning with it.

“The measure shows that miscalculations and minor political considerations are dominating the revival of an agreement that the international community has invested for years to achieve,” Naziri Asl remarked.

He also said, “It is a matter of serious concern that despite Iran’s extensive cooperation with the UN nuclear agency, the European Union, especially Germany, Britain and France, continue to resort to outdated tactics and play a dirty game with political motivation to target Iran’s ongoing cooperation with the IAEA.”

 

 

Shipowner demands stopping construction of fuel oil powered vessels

Precious Shipping boss Khalid Hashim has called on the IMO to put a hard stop on building fuel oil burning ships from 2030 and a scrapping of all vessels over 20-years old by 2035.

Along with a carbon tax starting from January 01, 2024, the radical proposals were put forward by Hashim, Managing Director of Precious Shipping and presented to the IMO last month via the Thai delegation through a video link, as well as to the Philippines IMO delegation, and at a recent HSBC conference.

The proposals from the Bangkok headquartered shipowner break down into three areas – a carbon tax, a hard stop on building fuel oil powered ships, and a mandatory scrapping of vessels over 20 years.

A carbon tax is already an item on the agenda for the key IMO MEPC80 meeting next month aimed at revising the industry’s ambitions for greenhouse gas emission reductions.

Hashim said the IMO should impose a tax of US$100 per metric ton (pmt) of CO2 emitted from January 01, 2024, increasing to US$200 pmt from 2030. Such a tax would increase the cost for ships engines burning fuel oil by US$320 pmt from January 01, 2024, and US$640 pmt from 2030.

He said it would provide massive resources exclusively for decarbonizing shipping and a universal tax would stop similar taxes by others.

The funds could be used for R&D into alternative fuels, subsidizing the costs of first movers, and building bunkering infrastructure. It would also push shipyards to build more zero emissions vessels (ZEVs) with a requirement of 5,000 such new builds a year to meet a 2050 zero emission target.

The second proposal involves a hard stop on building vessels that burn fuel oil and effectively forcing shipyards to produce ZEVs. “The IMO must put a hard stop to any fuel burning ships delivered by shipyards on or after January 01, 2030,” he stated.

Hashim cited the example of the automotive industry where a growing number of countries have set a deadline on production and sale of internal combustion engine vehicles. “Once they were given a deadline after which they could not produce or deliver diesel engine cars, significant numbers of electric cars are rolling off the assembly lines in every serious automotive manufacturing country,” he said.

This would give clarity to owners, shipyards, charterers and consumers with hard deadlines. He said it would also increase the capacity at yards needed to produce ZEVs, encourage charterers to enter into long term contracts for zero emission vessels, and for end consumptions to accept the increased cost in shipping.

The third proposal relates to a deadline by IMO for the scrapping of all ships over 20 years old by 2035.

“It will immediately reduce GHG emissions from the gas guzzling ships built in the past when fuel oil was not thought of as the culprit, that we can now see, all too clearly,” Hashim said.

The proposal would shrink the supply ships forcing clients to pay more shipping services the profits of which could be used to pay for the multi-trillion dollar cost of replacing the fuel oil burning fleet.

Renowned shipping economist Martin Stopford has estimated that replacing fuel burning ships with ZEVs will cost between US$1 trillion to US$1.5 trillion in a good case, or US$2 trillion to US$3 trillion in a poor case.

It would also accelerate the regulations for using alternative fuels, the training of crew, and creation of bunker hubs.

 

Saudi Arabian embassy in Sudan attacked

The attacks by armed groups on the diplomatic missions of Saudi Arabia and Bahrain in Sudan are a cause of grave concern. It is believed that these attacks have been made by the proxies of those who are annoyed by the role being played by Saudi Arabia to end animosities among the Muslim countries.

Saudi Arabia’s Ministry of Foreign Affairs has strongly condemned the sabotage and tampering carried out by some armed groups in the Kingdom’s embassy building and its annexes in Khartoum, capital of Sudan, on Wednesday.

The ministry also voiced its denunciation over the sabotage of the residence and properties of Saudi staff working in the embassy, the Saudi Press Agency reported on Thursday.

The ministry also expressed the Kingdom’s total rejection of all forms of violence and sabotage on diplomatic missions and representations. It also stressed the importance of confronting these armed groups that are trying to undermine the return of security and stability to Sudan and its brotherly people.

The Sudanese army confirmed last month that the circumstances of the war prevented the security forces from providing protection for diplomatic missions, refusing to hold it responsible for the looting of embassies in Sudan.

The army added in a statement that accusing the Rapid Support Forces of attacking embassies is based on reports and eyewitness accounts.

Meanwhile, the Bahraini Ministry of Foreign Affairs reported that the headquarters of the Bahraini embassy and the ambassador’s house in the Sudanese capital had been stormed and vandalized by an armed group.

The ministry renewed its call to the Sudanese parties to give priority to wisdom and the supreme national interest, and to respond seriously to the Saudi-American initiative to halt military operations.

 

crude oil prices fall on potential Iran deal

Oil prices fell US$3 a barrel on Thursday as demand weakness and a report that the United States and Iran may be approaching a deal on oil exports outweighed expectations of tighter Saudi supply and a potential pause to US interest rate hikes.

Oil fell on a news report, citing sources, that Iran and the US are nearing a temporary deal that would trade some sanctions relief in exchange for reducing Iran's uranium enrichment.

Brent crude was down US$2.2, or 2.86%, at US$74.64 a barrel by 1644 GMT, having earlier dropped as much as US$3.  WTI fell by US$2.40, or 3.3%, to US$70.12.

A larger than expected rise in US gasoline inventories also raised concern over demand, while US crude stockpiles registered a small decline of 451,000 barrels.

At an OPEC Plus meeting on Sunday, Saudi Arabia said it will cut its crude output by one million barrels per day in July on top of a broader deal to limit supply into 2024 as the producer group seeks to boost flagging prices.

"With the OPEC Plus meeting out of the way, focus is now shifting towards the next move the Fed will make when it meets next week," said Tamas Varga of oil broker PVM.

There is growing consensus that the central bank will skip a rate hike, which could lift oil prices even before falling supply starts draining global oil inventories, Varga added.

Economists polled by Reuters expect that the US Fed will not raise interest rates at its June 13-14 meeting. But a significant minority expects at least one more increase this year.

Still, a surprise rate increase in Canada gave investors their second reminder of the week, following the Australian central bank's monetary policy tightening, that the surge in global interest rates is not done yet.

The US dollar was slightly weaker on Thursday, making oil cheaper for buyers holding other currencies.

Both oil benchmarks settled up about 1% on Wednesday, supported by the Saudi plan, though gains remained capped by rising US fuel stocks and weak Chinese economic data.

Biofuels to play significant role in decarbonizing shipping

Biofuels face short-term production limitations but look set to play a significant role in the decarburization of shipping, according to a new DNV report.

The report titled ‘Biofuels in Shipping’ covers the current state of biofuel production, considerations for using biofuels on vessels, the regulatory status of biofuels, the potential for the fuel type and an outlook for biofuel production.

Short-term production constraints currently limit the adoption of biofuels, according to the report, and in the longer-term shipping may face challenges in securing biofuels as demand from other industries increases.

Extrapolating from bunkering of biofuel blends in Singapore and Rotterdam, DNV estimates that biofuels current account for around 0.1% of maritime energy consumption.

The potential production of advanced biofuels is limited by the supply of feedstocks such as used cooking oil and municipal waste; combined with other restrictions, DNV estimated biofuel production from the theoretical potential, down through the technical potential, economical potential, and sustainable potential.

 “We estimate that the global sustainable and economical biofuel potential lies between 400 – 600 Mtoe (million tons of oil equivalent) per year in 2030, after converting biomass to biofuel assuming a 50% conversion efficiency. This could grow to 500 – 1,300 Mtoe per year in 2050,” said the report.

DNV noted that its estimates were lower than those seen in other reports due to the report applying sustainability requirements in line with the EU Renewable Energy Directive II (RED II).

Combining two extreme scenarios – where shipping maximizes the use of biofuels and biofuel use across other sectors is low – shipping could account for 50% of biofuel energy use by 2050, said the report.  

The report noted that bio-emthanol and bio-LNG are drop-in fuels, whereas biodiesel and other liquid fuels may require some modifications to the ship, depending on the feedstock used for fuel production; operational changes may also be necessary, for instance avoiding leaving certain fuels in tanks for too long as some biofuels degrade more quickly than their fossil-derived equivalents.

On the regulatory front, biofuels can impact CII ratings, emissions under the EU MRV and EU ETS regimes, and FuelEU Maritime, all depending on various approvals and certifications of each particular fuel.

The findings of the report underlined the prevailing expectation in the industry that the future will involve a multi-fuel approach. “Biofuels are unlikely to be the only solution to shipping’s goal of transitioning to zero GHG emissions in the future,” said the report.

 

 

Whom to blame for current economic turmoil of Iran? United States or ruling regime of Iran

Middle East Institute has scheduled a discussion on the energy sector of Iran and the title is “Iran's Under-Developed Energy Sector, Faltering Economy, and the Looming Climate Crisis” on June 08, 2023.

The opening lines are extremely anti Iran and its ruling regime, dominated by religious clerics. It says, “Iran’s combined oil and gas reserves are the largest of any country in the world. And yet the government has long failed to generate policies that would enable the country to benefit from its huge natural resources”.

A pertinent question is some of Iran’s oil and gas-exporting neighbors have invested much in preparing their economies for the post-hydrocarbon era. In this regard, how does Iran compare in regional and global contexts?

The reply is simply, the ruling clergy just can’t be held responsible for the present dismal state. On the contrary it may be said that Iran has survived over four decades of the US sanctions, equally supported by the European and even some of the Arab countries.

Soon after the Islamic revolution, Iraq attacked Iran and the war continued for about a decade. President of Iraq, Saddam Hussein was a US tout, but when he became redundant, the US attacked Iraq and ultimately he was hanged.

To topple Saddam, the United States raised a hoax call that Iraq was busy in manufacturing weapons of mass destruction (WMD), British Prime Minister toed this line to mobilize opinion to support attack on Iraq. Even after two decades Iraq is still inferno.

The best efforts were made by the United States and its allies to destroy oil and gas infrastructure of Iran and Iraq, to push the two largest oil exporting countries out of oil and gas business. The latest targets are Venezuela and Russia, two of the other large oil exporting countries.

The world must salute the brave Iranians for enduring more than 10 years long war and more than four decades of economic sanction.

To put the record straight, the world must commend Iran rather than maligning the rulers for the dismal economy of the country.

Turkish lira drops 7%

Turkish lira plunged 7% to a record low on Wednesday in its biggest daily selloff since a historic 2021 crash, a move traders said was a strong signal that Ankara was moving toward a freely traded currency, away from state controls.

The lira has come under increasing pressure since President Tayyip Erdogan was re-elected on May 28. It slipped to a record low of 23.17 against the US dollar at 1023 GMT on Wednesday, bringing its losses this year to more than 19%.

For much of this year, authorities have taken a hands-on role in foreign exchange markets, using up tens of billions of dollars of reserves to hold the lira steady. The bank's net foreign exchange reserves touched a record low of negative US$4.4 billion last month, after forex demand surged during the election process.

Four traders said the decline in the central bank's forex and gold reserves had stopped as of last week, and that they could enter an upward trend, along with signs of the change in forex policies.

"There are many regulations and changes that need to be made but the destination we are headed in is becoming clearer every day. We are going towards the lira's value being determined by market conditions," one trader said.

Erdogan announced his new cabinet at the weekend and named Mehmet Simsek, a former deputy prime minister who is well regarded by foreign investors, as finance minister. Simsek later said economic policy needed to return to rational ground.

Markets are also waiting for the appointment of a new central bank governor to replace Sahap Kavcioglu, who spearheaded rate cuts under Erdogan's unorthodox policies.

"We are seeing policy normalization play out," said Tim Ash at BlueBay Asset Management. "I think we are seeing the impact of Simsek pushing the Turkish central bank for rational policy."

Another trader said the lira was nearing expected levels with sharp intraday losses, adding these would continue for some time. The lira is getting closer every day to a level that will not need to be defended with reserves.

Some analysts expect the lira to weaken towards a range of 25-28 against the dollar.

Under pressure from Erdogan, a self-described enemy of interest rates, the central bank slashed its policy rate to 8.5% from 19% in 2021 to boost growth and investment. But it sparked a historic lira crisis in December of 2021 and sent inflation to a 24-year high above 85% last year.

The return of Simsek, who was finance minister and deputy prime minister in 2009-2018, signalled a move away from the unorthodox rate cuts despite high inflation that have sparked a more than 80% erosion in the lira's value in five years.

Erdogan is considering appointing Hafize Gaye Erkan, a senior finance executive in the United States, as central bank governor, Reuters reported on Monday. Erkan met with Simsek in Ankara on Monday.

Erkan would be the country's fifth central bank chief in four years, after Erdogan fired previous governors as part of frequent policy pivots.

Turkish authorities are now hoping foreign investors will return after a years-long exodus, but market watchers cautioned that Erdogan turned to conventional policies in the past only to change his mind shortly after.

Turkey's sovereign dollar-denominated bonds gave away early gains to trade slightly negative on the day. ,

The premium demanded by investors to hold the country's hard-currency bonds over safe-haven US Treasuries widened again to 472 bps after tightening nearly 200 bps in the second half of May, data from JPMorgan showed.

"Even without political interference, the process of getting Turkey onto a sustainable path is going to be turbulent, and likely involves substantial devaluation and higher yields," said Paul McNamara, director of emerging market debt at asset manager GAM.

"We think fair value for the lira is probably 15% or so lower, but containing a devaluation without substantial external support is going to be a desperately difficult task," he said before Wednesday's decline.

"Orthodoxy would involve (above all) allowing the lira to find a sustainable level without intervention and abandoning the de facto capital controls currently in place."