Iranian oil exports hit five year high

Iranian crude exports and oil output have hit new highs in 2023 despite US sanctions, according to consultants, shipping data and a source familiar with the matter, adding to global supply when other producers are limiting output.

Tehran's oil exports have been limited since former US President Donald Trump in 2018 exited a 2015 nuclear accord and reimposed sanctions aimed at curbing oil exports and the associated revenue to Iran's government.

Exports have risen during the term of his successor President Joe Biden. Iranian and Western officials have said the US is holding talks with Iran to sketch out steps that could limit the nuclear program.

Iranian crude exports exceeded 1.5 million barrels per day (bpd) in May 2023, the highest monthly rate since 2018, according to Kpler, a provider of flows data. These were around 2.5 million bpd in 2018, before the US withdrawal from the nuclear deal.

Iran said in May it has boosted its crude output to above 3 million bpd. That's about 3% of global supply and would be the highest since 2018, according to figures from the Organization of the Petroleum Exporting Countries (OPEC).

A source familiar with the matter told Reuters earlier this month output was still at this level.

The International Energy Agency this week put Iran's May production at 2.87 million bpd, close to Iran's official figure.

The rise from Iran comes as OPEC Plus, which includes OPEC, Russia and other allies, is cutting output to support the oil market, where expectations that economic weakness will dent demand have pressured prices.

Other analysts say Iran's production and exports have risen. SVB International, a consultant, estimates crude production hit 3.04 million bpd in May, up from 2.66 million bpd in January. Exports of crude and condensate were 1.93 million bpd in May.

"Sanctions are in place but perhaps not fully implemented or monitored," said Sara Vakhshouri of SVB, who has previously said during Biden's term there hasn't been any serious crackdown or action against Iran's oil exports.

"Also all of these supply volumes are in the dark market, where there is no transparency and so these are not reflected in formal global supply and export data."

On the issue of whether the US is strictly enforcing the sanctions, the US State Department and Treasury did not immediately respond to requests for comment.

China is Iran's biggest customer while volumes also head to Syria and Venezuela, according to analysts and shipping data.

OPEC+ Plus agreed on June 4 a wide-ranging deal to limit oil supply into 2024. Iran is not required to make cuts as, together with Venezuela and Libya, it has an exemption. Nigeria is not exempt but has faced internal challenges in raising output.

Analysts at JP Morgan in a report this week said OPEC+  Plus needed to cut more. They lowered their Brent oil-price forecast for 2023 to US$81 a barrel from US$90, saying rising supply was offsetting demand growth.

"Within the broader OPEC Plus alliance, supply has been also rising outside the core members," the analysts at JP Morgan said, and revised up their production expectations for Venezuela, Nigeria and Iran by almost 600,000 bpd from November last year.

"Invariably, to make room for this supply growth, OPEC Plus needs to cut more, were the alliance to adhere to the market management strategy."

 

 

 

 

 

 

Iran and Cuba sign agreements

In the final step of his three-nation tour of Latin America, President Ebrahim Raisi of Iran visited Cuba on Thursday morning, Iran’s local time.

Upon his arrival in Havana, Raisi was warmly welcomed by his Cuban counterpart Miguel Diaz-Canel. They held private talks after the welcoming ceremony.

Iranian President is accompanied by a top economic and political delegation, including ministers of foreign affairs, oil, defense, and health.

Six cooperation documents and memorandums of understanding were signed between the senior officials of Iran and Cuba in the presence or Raisi and Diaz-Canel.

The cooperation agreements are in areas of comprehensive political cooperation, customs, digital communication, etc.

Raisi visited Havana after concluding his tour of Venezuela and Nicaragua. He started his tour of three Latin American states on Monday morning.

Amir Abdollahian said on Thursday that Iran and Cuba are among the pioneers of convergence in their own region.

“Iran and Cuba are among the pioneers in the development of regional convergence that can provide the opportunity for each other’s presence in coalitions formed on both sides of the globe,” he wrote on his Twitter account, according to Press TV.

Amir Abdollahian also said the two countries can cooperate in many fields, including biotechnology, medicine and nuclear energy.

Before starting his tour of Latin America, Raisi said Iran, Venezuela, Nicaragua and Cuba oppose hegemony and unilateralism in the world.

Raisi also met with Iranian businesspersons in Venezuela and Cuba.

In February, Amir Abdollahian had visited Nicaragua and Venezuela.

During Venezuelan President Nicolas Maduro’s trip to Tehran in June 2022, the two countries signed a 20-year partnership agreement intended to bolster cooperation in various fields.

The partnership agreement includes cooperation in science, technology, agriculture, oil and gas, petrochemicals, tourism and culture.

 

 

Saudi Foreign Minister to visit Iran on Saturday

Saudi Arabian Foreign Minister Prince Faisal bin Farhan Al Saud is scheduled to visit Iran on Saturday amid warming relations between the two important regional countries. The top Saudi diplomat will hold talks with Iranian officials during his Saturday trip to Tehran.

Earlier, some sources had raised the possibility that Saudi Arabia will reopen its embassy in Tehran during bin Farhan’s visit to Iran.

Iran reopened its embassy in Riyadh on June 6 and its consulate general and representative office in OIC in Jeddah on June 7.

On March 10, Iran and Saudi Arabia agreed to reestablish diplomatic ties after three days of intensive talks brokered by China.

Prior to the March 10 agreement, Iraq and Oman had hosted several rounds of talks between Iran and Saudi Arabia.

Saudi Arabia cut ties with Iran after students attacked the country’s embassy in Tehran in January 2016 in protest to the execution of opposition Shia cleric Nimr Baqir al-Nim and 46 other dissidents.

The attack on the embassy was condemned by top Iranian officials, including Leader of the Islamic Revolution Ayatollah Ali Khamenei.

Following the March 10 agreement, Iran and Saudi Arabia issued a joint statement in which the sides agreed to respect each other’s national sovereignty and avoid and kind of interference.

They also agreed to implement a security cooperation agreement signed in April 2001 and another accord reached in May 1998 to boost economic, commercial, investment, technical, scientific, cultural, sports, and youth affairs cooperation.

Since deciding to reestablish ties, the Saudi foreign minister and his Iranian counterpart Amir Abdollahian have met twice, first in Beijing on April 10 and then in Cape Town, South Africa, on June 02. The Saturday meeting will be the third in two months.

A former diplomat says the reopening of Iranian diplomatic missions in Saudi Arabia sends signal of peace and cooperation to the region and the world as well.

In an interview with the Press TV website on June 07, Sabah Zanganeh, who served as Iran's ambassador to the Jeddah-based OIC, hailed the restoration of diplomatic ties between Tehran and Riyadh.

He said the reopening of Iran’s diplomatic missions in Saudi Arabia is a step towards closer partnership between the two countries that sends a signal of peace and cooperation to the region and the wider world.

“Iran-Saudi normalization can greatly impact the region as it sends a signal to countries within the orbit of Saudi Arabia, particularly those in the Arabian Peninsula, to seek friendship with Tehran and avoid decisions that might displease the country,” the former diplomat stressed.

He said the reopening of the diplomatic missions will be a stepping stone for the expansion of ties between the two sides in the areas of economy, security and culture, etc. 

Zanganeh said the rapprochement can pave the way for a regional peace drive and help end small or big conflicts, particularly in Yemen and Syria.

“The rapprochement between Iran and Saudi Arabia has so far helped ease tensions in Yemen and cemented efforts to end the suffering of people in the Arab world’s poorest nation, Yemen. Now we can expect a full-fledged ceasefire in the country,” he said.

These turn of events, the former diplomat added, can help expedite Syria’s return to the Arab fold, which will greatly help the war-torn country’s economy.  

Iran-Saudi détente comes amid the intense regional push for peace and reconciliation with many countries queuing up to restore or upgrade ties with the Islamic Republic in recent months.

This regional diplomatic drive has caused alarm in Washington and Tel Aviv.

A day after the reopening of the Iranian embassy, US Secretary of State Antony Blinken held wide-ranging talks with Saudi Crown Prince Mohammad bin Salman in Jeddah, making a renewed push for Riyadh-Tel Aviv normalization that Saudi Kingdom has already ruled out. 

Asked if Saudi Arabia might succumb to pressure from the US and Israel, Zanganeh said Riyadh resisted pressure from former US president Donald Trump to normalize with Israel and he doesn’t see any reason to believe things would change now. 

"Saudi Arabia has its own reservations when it comes to Israel. The Saudi leaders describe themselves as custodians of the two Holy Mosques so they can’t easily make the decision to openly befriend the Israeli regime. Saudi Arabia is not the UAE or Bahrain,” he commented.

 

China cuts medium term lending rates, while US Fed leaves rate unchanged

China's central bank has cut the borrowing cost of its medium-term policy loans for the first time in 10 months on Thursday. This is in line with expectations, as Beijing ramps up stimulus measures to shore up a shaky economic recovery.

The People's Bank of China (PBOC) said it lowered the rate on 237 billion yuan (US$33.1 billion) of one-year medium-term lending facility (MLF) loans to some financial institutions by 10 basis points to 2.65% from 2.75% previously.

In a Reuters poll of 33 market watchers this week, all respondents had predicted a cut to the MLF rate, with 94% of them expecting a 10-bps cut.

It may be recalled that the US Federal Reserve had left interest rates unchanged on Wednesday but signaled in new projections that borrowing costs may still need to rise by as much as half of a percentage point by the end of this year, as the US central bank reacted to a stronger than expected economy and a slower decline in inflation.

In a press conference at the end of the central bank's latest policy meeting, Fed Chair Jerome Powell described US growth and the job market as holding up better than expected under the weight of the aggressive monetary policy tightening of the past year - likely lengthening the Fed's fight to lower inflation but also letting it proceed with less economic damage.

US dollar tumbles to four week low

The US dollar dropped to four-week lows on Wednesday after data showing weaker than expected US producer and consumer prices cemented the view that the Federal Reserve will not raise interest rates later in the day.

China's yuan sagged to its weakest in over six months after the central bank cut rates, and as speculation mounts that more stimulus is on the way to support the sputtering post-COVID-19 economic recovery.

The Fed is widely expected to hold interest rates unchanged at a range of between 5.0% and 5.25% later on Wednesday. For the July meeting, the rate futures market has priced in a more than 60% chance of a 25-basis-point hike.

In late morning trading, the dollar index, which measures the performance of the US currency against six others, fell 0.5% to 102.79, after touching its lowest since May 21 at 102.78.

"I look at the January 2024 fed funds futures contracts and that is implying a 5.10% rate," said Marc Chandler, chief market strategist at Bannockburn Forex in New York.

"That tells me the market says -- and it all depends on what (Fed Chair Jerome) Powell and the Fed couches their move that they're not necessarily done -- the Fed is done. I think it will be hard for the Fed to convince the market otherwise," he added.

Supporting market expectations of a pause was a report which showed that US producer prices fell more than expected in May, with the annual increase in producer inflation being the smallest in nearly 2-1/2 years.

That followed soft consumer price data on Tuesday which showed that the US consumer price index edged up 0.1% last month after increasing 0.4% in April. In the 12 months to May, the CPI climbed 4.0%, the smallest year-on-year increase since March 2021, after rising 4.9% in April.

The dollar index was headed for its largest two-week drop since late March, having lost about 1.2% in value in that time, as the view has taken hold among investors that, while the Fed may be close to the end of its current course of rate hikes, other central banks have further to go.

"The dollar has been broadly consolidating for the most part. But I think overall the dollar has peaked," Bannockburn's Chandler said.

The Reserve Bank of Australia and the Bank of Canada last week delivered surprise rate rises, while the chances for the Bank of England to deliver a half-point rise when it meets next week have reached 20% after shock wage-growth data on Tuesday.

The euro has been steadily clawing back from 2-1/2-month lows in late May and was last up 0.5% at US$1.0845. The European Central Bank (ECB) delivers its decision on rates on Thursday, with a quarter-point hike to 3.50% widely expected.

Sterling rose 0.6% to US$1.2686, after earlier hitting its highest since April 2022 of US$1.2691.

The dollar slid 0.6% against the yen to 139.43 yen, retreating from a one-week high the day before. The Bank of Japan is expected to retain its ultra-easy policy settings on Friday.

Meanwhile, the Chinese yuan hit 7.1785 earlier, its weakest against the dollar since late November. It was last at 7.152 per US dollar, up 0.3%.

The People's Bank of China's cut a key short-term lending rate for the first time in 10 months on Tuesday and is widely expected to cut the borrowing cost on medium-term policy loans on Thursday, a Reuters poll showed.

 

China willing to help foster Palestinian peacemaking with Israel

China is willing to play a positive role to help the Palestinians achieve internal reconciliation and promote peace talks with Israel, Chinese President Xi Jinping told his Palestinian counterpart in Beijing on Wednesday.

"The fundamental solution to the Palestinian issue lies in the establishment of an independent Palestinian state based on the 1967 borders with East Jerusalem as its capital," Xi said, according to Chinese state media, reiterating a 1967 UN Security Council resolution that Israel has long rejected.

The international community should increase development assistance and humanitarian help to the Palestinians, Xi added.

Palestinians seek statehood in the West Bank, Gaza and East Jerusalem, territories occupied by Israel in the 1967 Middle East war. Israel quit Gaza in 2005 but continues to expand settlements in the West Bank and calls Jerusalem its eternal, indivisible capital.

Peace talks that were brokered by the United States have been frozen since 2014.

Palestinians' internal divisions also complicate peacemaking, with the Islamist Hamas movement that rules Gaza publicly sworn to Israel's destruction. Abbas heads the Palestinian Authority that exercises limited self-rule in the West Bank.

Abbas is in Beijing on a three-day visit in which he hopes to demonstrate Chinese support for a Palestinian state, after failing to meet with US officials while in New York for the United Nations General Assembly last year.

China has historically good relations with the Palestinians and since Abbas' last visit in 2017 has consistently talked up its capabilities in mediation, although with little to show in this regard until it brokered a surprise deal between Iran and Saudi Arabia to restore diplomatic ties in March.

"We have always firmly supported the just cause of the Palestinian people to restore their legitimate national rights," Xi told Abbas at a welcome ceremony at Beijing's Great Hall of the People.

Xi and Abbas also announced the two sides had agreed to establish a strategic partnership and signed a number of bilateral documents, including an economic and technological cooperation pact.

On Tuesday, Chinese Foreign Minister Qin Gang offered to contribute Chinese wisdom to the Palestinian issue in a separate meeting with Palestinian counterpart Riyad al-Maliki.

 

Lebanon: Failure to elect new president deepens crisis

Lebanon plunged deeper into crisis on Wednesday when Hezbollah and its allies thwarted a bid by their rivals to elect a top IMF official as president, sharpening sectarian tensions and underlining the dim hopes for reviving the crumbling state.

Four years since Lebanon slid into a financial meltdown that marks its worst crisis since the 1975-90 civil war, parliament failed for the 12th time to elect someone to fill the post reserved for a Maronite Christian under the country's sectarian system.

Lawmakers from the Iran-backed armed Shi'ite group Hezbollah and allies including the Shi'ite Amal Movement withdrew from the session to obstruct a bid by the main Christian parties to elect IMF official Jihad Azour.

The standoff has opened up a sectarian faultline, with one of Hezbollah's main Christian allies - Gebran Bassil - lining up behind the bid to elect Azour, alongside anti-Hezbollah Christian factions.

Azour, the IMF's Middle East Director and an ex-finance minister, won the support of 59 of parliament's 128 lawmakers in an initial vote, short of the two-thirds needed to win in the first round. Suleiman Frangieh, backed by Hezbollah and its allies, got 51 votes.

Hezbollah and its allies then withdrew, denying the two-thirds quorum required for a second round of voting in which a candidate can win with the support of 65 lawmakers.

It leaves Lebanon with no immediate prospect of filling the presidency, which has been vacant since the term of the Hezbollah-allied President Michel Aoun ended in October last year.

Hezbollah, which says it is exercising its constitutional rights, is backing its close Christian ally Frangieh, a friend of Syrian President Bashar al-Assad who strongly supports Hezbollah's right to possess weapons.

Hezbollah, which is designated as a terrorist group by the United States, has unleashed fierce rhetoric in their campaign against Azour, describing him as a candidate of confrontation.

Lebanon's Shi'ite Mufti Sheikh Ahmad Qabalan dialled up the attacks on Sunday against Azour without naming him, accusing him of being backed by Israel and saying "a president with an American stamp will not be allowed".

Azour, 57, has said he wants to build national unity and implement reforms in a country mired in its deepest crisis since its 1975-90 civil war.

Azour served as finance minister from 2005 to 2008, a period of political conflict pitting a government backed by the West and Saudi Arabia against opponents aligned with Damascus and led by Hezbollah.

He also enjoyed the support of Lebanon's main Druze faction, the Progressive Socialist Party led by the Jumblatt family, and some Sunni lawmakers.