Pakistan pays Russian crude price in Chinese currency

According to a Reuters report, Pakistan has paid for its first government to government import of discounted Russian crude in Chinese currency. It is a significant shift in its US dollar dominated export payments policy.

Discounted crude offers respite as Pakistan faces an acute balance of payments crisis, risking a default on its debt obligations. The foreign exchange reserves held by the central bank are scarcely enough to cover four weeks of controlled imports.

The first cargo of discounted Russian crude oil arranged under a new deal struck between Islamabad and Moscow earlier this year arrived in Karachi on Sunday. It is currently being offloaded at the port in the southern city of Karachi.

Petroleum Minister Musadik Malik, talking to Reuters by phone, did not disclose the commercial details of the deal, including pricing or the discount that Pakistan received, but said the payment was made in Chinese currency.

He said the purchase, Pakistan's first government-to-government (G2G) deal with Russia, consisted of 100,000 tons, of which 45,000 tons had docked at Karachi port and the rest was on its way. Pakistan made the purchase back in April.

Pakistan's purchase gives Moscow a new outlet to add to growing sales to India and China, as it redirects oil from western markets because of the Ukraine conflict.

Despite being a long-standing Western ally and the arch-rival of neighbouring India, which historically is closer to Moscow, analysts say the crude deal also presents a new avenue for Pakistan at a time that its financing needs are great.

Pakistan's Refinery Limited (PRL) will initially refine the Russian crude, the minister said. He had earlier referred to the purchase of the shipment as a trial run to judge financial and technical feasibility.

Malik on Monday played down concerns around the financial viability and concerns about the ability of local refineries to process Russian crude given the South Asian country's historical importation of Middle Eastern petroleum products.

"We've run iterations of various product mixes, and in no scenario will the refining of this crude make a loss," Malik said, adding, "We are very sure it will be commercially viable."

"No adjustments (were) needed at the refinery to refine the Russian crude," the minister told Reuters.

Energy imports make up the majority of the Pakistan's external payments. Islamabad imported 154,000 bpd of oil in 2022, around steady with the previous year, data from analytics firm Kpler showed.

The crude was predominantly supplied by the world's top exporter Saudi Arabia followed by the United Arab Emirates. The 100,000 bpd from Russia in theory greatly reduces Pakistan's need for Middle Eastern fuel.

 

Iran emerges second largest sponge iron producer in the world

According to an IRNA report, the World Steel Association (WSA), in its latest annual report, has ranked Iran second among the world’s top sponge iron-producing countries for the year 2022.

Islamic Republic managed to produce 32.9 million tons of sponge iron in 2022 to stand at second place after India with 42.3 million tons of production.

According to WSA, Iran also kept its place as the world’s 10th largest steel producer last year, with 30.6 million tons of crude steel output.

Iranian Mines and Mining Industries Development and Renovation Organization (IMIDRO) was also reported to be the world’s 20th largest company based on the WSA ranking.

The total global production of crude steel in 2022 was 1.301 million tons while the consumption of this product in the world was 1.301 billion tons.

Earlier, WSA in its monthly report for April 2023 ranked Iran eighth among the world’s top steel-producing countries for the mentioned month, indicating a one-place rise compared to the previous month.

The April report showed that Iran’s crude steel output increased 5.9% in the mentioned month while the global average growth rate stood at negative 2.4%.

Based on the WSA data, Iran produced 3.1 million tons of crude steel in April.

Meanwhile, the Islamic Republic produced 9.7 million tons of steel in the first four months of 2023, registering a nominal growth of 0.1% as compared to the same period in the previous year.

WSA report said that the world’s 64 steel producers managed to produce 161.4 million tons of the commodity in April, 2.4% less than the figure for the previous year’s same period.

The steelmakers produced 622.7 million tons of steel in the first four months of this year, which indicates a 13% drop as compared to the same period last year.

According to the WSA report, China, India, Japan, the United States and Russia were the world’s top steel producers respectively.

The Iranian steel industry has been constantly developing over the past years despite all the pressures and obstacles created by outside forces like the US sanctions and the coronavirus outbreak that has severely affected the performance of the world’s top producers.

 

Iran, India cooperation in agriculture

According to Mehr News Agency, Iranian and Indian officials have agreed to form a joint committee for cooperation in agriculture between the two countries within the next three months.

The consensus was reached in a meeting between Iran's Deputy Agriculture Minister Mohammad Mehdi Borumandi and Secretary of India's Agriculture and Farmers Welfare Ministry Manoj Ahuja in New Delhi.

Borumandi, traveled to New Delhi to hold talks on the agricultural cooperation between Iran and India and met with his Indian counterpart to review the latest status of bilateral cooperation in the field of agriculture.

The officials also agreed to hold the first joint working group on agricultural cooperation between the two countries in the near future.

In the meeting, Borumandi stressed Iran's readiness for cooperation in various fields including horticultural products, medicinal plants, combating plant pests, agricultural technologies, exchange of professors and experts, and cooperation between research institutions of the two countries.

He considered the removal of tariff barriers on agricultural trade as a necessity for the future expansion of relations.

Manoj Ahuja, for his part, highlighted the cultural and geographical affinities between the two nations and expressed his country's readiness to develop agricultural relations with Iran.

Welcoming the fields proposed by the Iranian side for cooperation, the Indian official announced that the ban on the exports of kiwi to India, which had been temporarily prohibited since last year due to quarantine considerations, has been lifted.

The trade between Iran and India reached US$510 million in the first quarter of the current year, according to the data released by India’s Ministry of Commerce and Industry.

According to the report, agricultural products and especially rice had the largest share in India’s exports to Iran. Rice accounted for 63% of the total volume of exports, while fruits with US$15 million, and tea with US$10 million ranked second and third.

 

Israel: Protests against Judicial Reforms continue for 23rd week

Protests against the current government's plans to implement the judicial reforms continued throughout the country for the 23rd week in a row on Saturday evening with demonstrators raising a 200 square meter sign that stated: Type of citizen: dead in response to the 100th person killed this year as a result of crime in Arab areas in Israel.

Demonstrations were held in Dizengoff Square and Kaplan Street in Tel Aviv, as well as in Haifa. 

Speakers at Kaplan Street, the main demonstration with the largest number of participants, included Dr. Thabat Abu Ras, co-CEO of the Abraham Initiatives Association, who criticized the current government on their handling of murders and crime in Arab society.

Many roads in Tel Aviv were closed to traffic due to the protests.

"This week is important and critical. We'll have to make sure that the practice of electing an opposition member and a coalition member is preserved," the organizers of the demonstrations said, referring to the composition of the committee that will select judges once the reforms are implemented. 

Approximately 80,000 people demonstrated in Kaplan Street, according to Ynet, while a report from Walla (citing the protest organizers) states that 100,000 people protested against the judicial reform overall in Tel Aviv.

More than one thousand people demonstrated in Jerusalem in front of the President's house, Ynet reported.

At the beginning of the demonstration, protestors observed a moment of silence in memory of the 100 Arab Israeli victims this year.

At the Nahalal junction, near Highway 73, demonstrators lit 100 candles in memory of the 100 victims of violence in Arab society since the beginning of the year.

About 3,500 people participated in the demonstration.

 

'Nothing wrong' with a nuclear deal with West, says Khamenei

Iran's supreme leader said on Sunday that a deal with the West over Tehran's nuclear work was possible if the country's nuclear infrastructure remained intact, amid a stalemate between Tehran and Washington to revive a 2015 nuclear pact.

Months of indirect talks between Tehran and Washington to salvage the nuclear accord with six major powers have stalled since September 2022, with both sides accusing each other of making unreasonable demands.

Ayatollah Ali Khamenei's guarded approval comes days after both Tehran and Washington denied a report that they were nearing an interim deal under which Tehran would curb its nuclear program in return for sanctions relief.

"There is nothing wrong with the agreement (with the West), but the infrastructure of our nuclear industry should not be touched," Khamenei said, according to state media.

The 2015 agreement limited Iran’s uranium enrichment activity to make it harder for Tehran to develop nuclear arms, in return for lifting international sanctions.

In 2018, the then US President Donald Trump exited the pact and re-imposed sanctions that have crippled Iran's economy, leading Tehran to gradually move well beyond the deal's nuclear restrictions and reviving US, European and Israeli fears that Iran may seek an atomic bomb.

Echoing Iran's official stance for years, Khamenei said the Islamic Republic has never sought to build a nuclear bomb.

"Accusations about Tehran seeking nuclear weapons are a lie and they know it. We do not want nuclear arms because of our religious beliefs. Otherwise they (the West) would not have been able to stop it," said Khamenei.

Khamenei, who has the last say on all state matters such as Iran's nuclear program, said the country's nuclear authorities should continue working with the UN nuclear watchdog "under the framework of safeguards".

Under the law, Tehran would suspend IAEA inspections of its nuclear sites and step up uranium enrichment if sanctions are not lifted.

"This is a good law ... which must be respected and not violated in providing access and information (to the IAEA)," Khamenei said.

Last month, the International Atomic Energy Agency reported limited progress over disputed issues with Iran, including re-installing some monitoring equipment originally put in place under the 2015 pact that Tehran ordered removal last year.

 

US dollar dominance eroding fast

The end of the dominance of the United States dollar is nigh as the Chinese yuan rises and the rest of the world sees the peril of the West's failed attempt to bring Russia to its knees over Ukraine, one of Moscow's most powerful bankers told Reuters.

Andrei Kostin, the CEO of state-controlled VTB, Russia's second largest bank, said the crisis was ushering in sweeping changes to the world economy, undermining globalization just as China was taking on the mantle of a top global economic power.

Asked if he thought the world was in a new Cold War, Kostin said that it was now a hot war that was more dangerous than the Cold War.

The United States and the European Union, he said, would lose from moves to freeze hundreds of billions of dollars of Russian sovereign assets as many countries were moving to settling payments outside the US currency and the euro while China was moving towards a removal of currency restrictions.

"The long historical era of the dominance of the American dollar is coming to an end," Kostin, told Reuters on the 59th floor of the gleaming VTB skyscraper overlooking southern Moscow. "I think that the time has come when China will gradually remove currency restrictions."

"China understands that they will not become world economic power Number one if they keep their yuan as a non-convertible currency," Kostin said, adding that it was dangerous for China to keep reserves invested in US sovereign bonds.

The US dollar has been dominant since the early 20th Century when it overtook the pound sterling as the global reserve currency, though JPMorgan said this month that signs of de-dollarization are unfolding in the global economy.

China's spectacular economic growth over past 40 years, fallout from the war in Ukraine and wrangling over the US debt ceiling has put the dollar's status under fresh scrutiny.

A former diplomat who served in Australia and Britain and went into banking just after the Soviet Union collapsed, Kostin is one of Moscow's most powerful and experienced bankers, having served previously as head of Vneshekombank, known now as VEB.

After President Vladimir Putin sent troops into Ukraine in February last year, the West unfurled what it said were the toughest sanctions ever imposed in an attempt to weaken the Russian economy and punish Putin for the war.

Kostin was sanctioned by the United States in 2018 over what it called Russia's malign activity around the world. After the war, he was sanctioned by the EU and by Britain which called him "a close associate of Putin".

He said the sanctions were unfair and a political decision that would backfire on the West, quipping that he had read interesting articles about the laundering of drug money through major Western banks.

"We have already entered into a hot war," Kostin said of the crisis with Ukraine. "It is not cold when there are so many Western weapons and a lot of Western services and military advisers involved. The situation is worse than in the Cold War, it is very difficult and alarming."

Kostin said VTB would see a profit of 400 billion roubles (US$4.9 billion) in 2023 after a bumper first five months of the year and a record loss last year.

Russia's economy, he said, would not be broken by the West. The International Monetary Fund in April raised its 2023 Russian GDP forecast to growth of 0.7% from 0.3%, but lowered its 2024 forecast to 1.3% from 2.1%.

"Sanctions are bad, and we suffer from them, of course. But the economy has adapted," he said. "At the same time, we expect that sanctions will intensify, they will be tightened, some windows will be closed, but we will also find other opportunities."

Asked if Russia's economy would remain a free economy, Kostin said: "I very much hope so."

(US$1 = 82.0000 roubles)

 

Iraq agrees to pay Iran US$2.76 billion

Iraq has agreed to pay about US$2.76 billion in gas and electricity debt to Iran after receiving a sanctions waiver from the United States, a senior Iraqi foreign ministry official said.

Iraqi Foreign Minister Fuad Hussein was given the clearance during a meeting with US Secretary of State Antony Blinken on the sidelines of the Riyadh Conference, the foreign ministry source, who spoke on condition of anonymity because he is not authorized to speak to the media, told Reuters.

Due to decades of conflict and sanctions, Iraq is dependent on imports from Iran for a lot of its gas needs. However, US sanctions on Iranian oil and gas have hampered Iraq's payments for imports, putting it in heavy arrears and leading Iran to retaliate by cutting gas flows regularly.

Iraqi Foreign Ministry spokesperson Ahmed Al-Sahhaf said in a brief statement that Hussein had made progress regarding financial dues between Iraq and Iran during his discussion with his American counterpart in Riyadh" when asked about the funds. He did not give further details.

Yahya Al-e Eshaq, head of the Iran-Iraq chamber of commerce, was quoted by Iranian news agencies as saying, "Part of Iran's blocked funds in Iraq has been earmarked for haj pilgrims and portions have been used for basic goods."

The Iraqi foreign ministry source said that the funds will be transferred through the Commercial Bank of Iraq and confirmed that the money will be used for Iranian pilgrims' expenses and foodstuffs imported by Iran.

Iran has been unable to access billions of dollars in assets in several countries due to US sanctions.

The United States has insisted that oil-rich Iraq, the OPEC group's second-largest producer, moves towards self-sufficiency as a condition for its exemption to import Iranian energy, yet Baghdad has struggled to do so.