US oil reserves plunge to a 40 year low

The Biden administration has been draining the strategic petroleum reserves since the start of the Ukraine war in February 2022 to cap energy prices. At present the super power faces a double edged sword because its oil reserves have plunged to a 40-year low and global crude prices hover around US$100/barrel.

Reportedly, there has been a steep drop in US strategic petroleum reserves. The plunge in oil stocks highlights the mounting risks to US energy security. Low domestic reserves could increase reliance on imports, potentially making it more vulnerable to supply disruptions and price volatility in the global oil market.

The international crude benchmark has charged upward in recent months, jumping almost 30% since late May this year.

Oil prices have been climbing as top global producers, led by Saudi Arabia and Russia, extend production cuts announced earlier this year in a bid to maintain price stability.

After the Ukraine war broke out in early 2022, the US government has used its Strategist Petroleum Reserve as its biggest buffer against global energy-price volatility.

Last year, it had released 180 million barrels from the SPR to hedge against expensive oil prices, and cool decades-high inflation.

While the Biden administration has been planning to replenish the SPR, the amount of barrels left in the reserve is currently less than half of the all-time highs reached in 2010.

 

United States-Iran relations driven by US domestic politics

The United States is one of the very few countries having most long-term tensions with other countries. The reasons are diversified, some of which are actually rooted in US domestic politics. The tensions between Iran and the US are a typical example.

According to Jin Liangxiang, a Senior Research Fellow and Deputy Director at the Center for West Asian and African Studies, Shanghai Institute for International Studies, Iran had tried but has failed many times to reach a détente with the US, and the reason actually was on the US side.

It is US domestic politics that had disrupted several processes of potential rapprochements. In other words, Iran-US relations had long been kidnapped by US domestic politics.

The meddling of US domestic politics in its foreign policy takes place in two ways. The first one is party politics. There are two major parties in the United States, namely the Republican and the Democratic parties. For the interests of its own party, one party would always challenge the actions, decisions and policy of the administration led by the other party within the context of party politics. As a result, an international multilateral agreement or a solution on one particular hotspot reached by an administration led by one party could be easily intentionally sabotaged by the other party in Congress.

The second is transition politics. An international solution of one administration could be abandoned by the next administration as the successor would legitimatize its own actions, decisions and policy by de-legitimatizing those of the predecessors. Usually, this kind of challenge takes place early before taking office. Anyway, it is always the best way to win the election by criticizing the policy of the incumbent.

The above-mentioned two scenarios take place in many US foreign policy issues. In climate change issues, the agreements reached by administrations led by the Democrats had been often challenged by the Republicans, and even overthrown by the Republicans in Congress.

US-Saudi policy of the Republican presidents could very easily be reversed by the Democrats either in Congress or by the president of Democrats in the name of human rights. US policy toward China, Russia and numerous other countries is also affected by US domestic politics.

Iran-US relations and US policy toward Iran are typical examples of how US domestic politics disrupted its foreign policy.

The last two decades had seen that US administrations had intended to negotiate a solution to various issues related to US-Iran relations, for instance, the nuclear issue, but had been strongly resisted by Republicans in Congress.

In 2018, the Trump Administration even withdrew from the JCPOA negotiated arduously by Barack Obama’s Democratic administration.

History also had seen how US domestic politics affected the improvement of Iran-US relations.

In the mid-1990s, Akbar Hashemi Rafsanjani, when he was president, had intended to reverse and improve Iran’s relations with the US even by promising US companies to develop Iran’s energy projects, which was regarded as a big business. Albeit this favorable offer, Iran had been rewarded with Iran and Libya Sanctions Act by Congress and then was signed by President Clinton. The ACT prohibited companies from the US and other parties from investing in Iran’s oil sectors.

From 2001 through 2002, President Khatami saw the 9/11 attacks as an opportunity to reverse and improve its relations with the US and gave very substantial support to the US in its military actions to fight against Al Qaeda and for regime change in Afghanistan. But Iran was not rewarded with goodwill from the US side, instead, junior Bush in his 2002 State of the Union address unreasonably labeled Iran together with Iraq and DPRK as “Axis of Evils”, which later served as the beginning of US policy to further isolate Iran in the two decades.

A similar cycle also occurred to Hassan Rouhani’s efforts to reverse Iran-US relations. It is not deniable that Barack Obama’s administration had seriously meant to have a deal with Iran on the nuclear issue, and to have a comprehensive dialogue as a second step after the deal.

It was with this spirit that Iran and the US together with other parties finally reached the Joint Comprehensive Plan of Action (JCPOA), also dubbed as the Iran nuclear deal, on July 04, 2015. If implemented reasonably, Iran could have reversed and improved its relations with the US, which might be something serious in then Iranian President Hassan Rouhani’s mind.

Donald Trump criticized fiercely his predecessor for negotiating the JCPOA as benefiting Iran, and he believed that such criticism could enhance his position in the presidential campaign in 2016. Immediately after taking office in early 2017, Donald Trump declared that he would withdraw from the deal, and really did so in 2018 while launching the “maximum pressure” policy on Iran, which triggered Iran’s suspension of implementation of the deal step by step. History had seen the US had lost another opportunity to reverse its relations with Iran, a great civilization.

Despite efforts on the Iranian side from Rafsanjani to Khatami and Rouhani, the relations between Iran and the US had seen a very strange rationale.

Every time the real change could happen, the positive trends had been reversed. It seemed that a very strong force had been blowing back against the trends, which finally put Iran-US relations into a worse scenario each time.

The reasons actually lie in US domestic politics. There are three categories of anti-Iran forces in the US.

The first should be those political liberalists, who regard any non-Western political system as authoritarian and the Islamic system is no exception.

The second should be pro-Israel political lobbyists, advocating counter-Iran policy for the interests of Israel.

The third should be those who had negative memories of the Islamic Revolution, and they would like to take every opportunity to defame the Islamic Revolution.

The movie Argo even won several Academy Awards, which in some way reflected the anti-Iran social sentiments in the US.

Though some US administrations did want to improve relations with Iran, they failed to do so in a sustainable way. Those anti-Iran forces would not only promote anti-Iran policy on a regular basis but also take the advantage of US party politics, congressional politics and transition politics to reverse any trends to change their relations for the better. 

That explains the nexus of problems in Iran-US relations. Though Iran had tried many times to make changes in Iran-US relations, the efforts were strongly either resisted or reversed by anti-Iran political forces in the US via its domestic politics. The root causes of Iran-U.S. relations lie in the US side, particularly its domestic politics. To put it another way, it was the US itself that had lost Iran, which though was detrimental primarily to the interests of the US itself.

Two state solution blocks Saudi-Israel peace deal, says Pompeo

It could be impossible to establish a Saudi Arabia-Israel peace deal if a prerequisite is the Palestinians receiving or accepting a Palestinian state, according to former US secretary of state Mike Pompeo.

Pompeo helped orchestrate the Abraham Accords under former US president Donald Trump, which normalized relations between Israel and the United Arab Emirates, Morocco, and Bahrain.

Pompeo told The Jerusalem Post that it is impossible to imagine a two-state solution with the current Palestinian leadership who is underwriting terrorism, taking money from Iran, paying citizens to kill Israelis.

“It is very difficult to imagine how one would strike a deal with the very leaders that have rejected every reasonable offer with which they have been presented.”

Pompeo spoke to the Post the day after Saudi Arabia’s first ambassador to the Palestinian Authority, Nayef al-Sudairi, visited Ramallah. During his visit, al-Sudairi emphasized that creating a Palestinian state with east Jerusalem as its capital would be a fundamental cornerstone in any prospective agreement with Israel.

“The Arab Peace Initiative is the central point of any upcoming agreement,” al-Sudairi said.

Saudi Arabia Peace Initiative was initially ratified by the Arab League in 2002 and subsequently reaffirmed in 2007 and 2017. It requires a complete withdrawal of Israel from the West Bank and Golan Heights, establishing a Palestinian state with eastern Jerusalem as its capital, and a just settlement of the Palestinian refugee crisis.

In speaking about normalization with Saudi Arabia at the United Nations General Assembly last week, Prime Minister Benjamin Netanyahu said, “We must not give the Palestinians a veto over new peace treaties with Arab states. The Palestinians could greatly benefit from a broader peace. They should be part of the process, but they should not have a veto over the process.”

Similarly, in an interview with Fox News, Saudi Crown Prince Mohammed bin Salman did not mention a Palestinian state but only said that the Palestinian issue is very important. We need to solve that part.

He said, “We got to see where we go. We hope that we will reach a place that will ease the life of the Palestinians and get Israel as a player in the Middle East.”

Pompeo said every American president would support a normalization agreement – Democratic or Republican. He said it is in America’s interest to have security relations between the United States and Saudi Arabia and between Israel and Saudi Arabia.

He said peace would be more easily attainable with a Republican president, meaning one that understands the greatest threat to peace in the region is Iran.

He explained that the Abraham Accords advanced due to the Trump administration’s acknowledgment of Israel as America’s primary democratic ally in the region while identifying Iran as the leading state sponsor of terrorism and a significant threat to all other countries.

“When we isolate Iran, the region becomes more peaceful and prosperous,” Pompeo said.

 

Pakistan Stock Exchange closes almost flat

The market remained lackluster throughout the week ended on September 28, 2023.

Despite the visit of the Caretaker Prime Minister to the UN, no significant positive developments or outcomes were observed.

On the macroeconomic front, the federal government is intensifying its efforts to reduce spending following a recommendation from the World Bank, aiming to simultaneously increase revenues. The news flows indicated a possible reduction in the PSDP spending.

 Inflation for this month is still expected to remain high, around 30%YoY. Meanwhile, the Pakistani rupee continues to strengthen against the greenback, posting a weekly gain of 1.4% to close at PKR287.7/US$ by week-end.

Internationally, oil prices have resumed their upward trend, amid supply crunch, after a brief easing earlier in the week, with Brent crude currently hovering at US$95.6 per barrel.

Overall, average trading volumes improved by 45.6%WoW rose to 202 million shares as compared to 139 million shares traded in the earlier week.

The benchmark KSE-100 Index lost 189 points during the week, depicting a 0.4% decrease in the index.

Other major news flows during the week included: 1) profit repatriation surged by 74% in July-August, 2) Jul-Aug period borrowing from multiple financing sources rose to US$3.206 billion, 3) RDA inflows reported at US$6.6 billion for August, 4) CGS of KSA Armed Forces met President, and 5) Pakistan owed US$1.2 billion to Chinese power producers.

Transport, Tobacco, and Paper & Board were amongst the top performing sector. Vanaspati and allied industries, Technology and Textile were amongst the worst performing sector.

Major net selling was recorded by Banks with net selling of US$6.3 million. Individuals and companies absorbed most of the selling with a net buy of US$3.7 million and US$1.4 million, respectively.

Top performing scrips of the week were: EFUG, PGLC, CEPB, NRL, and PAKT, while top laggards were: POL, GADT, SYS, FFBL, and HBL.

Looking ahead, the market's performance is anticipated to be significantly influenced by the upcoming IMF review scheduled for November.

Regarding the political landscape, while the expected timeline for elections is given, providing exact dates for the elections would be a positive development.

Upcoming inflation readings and current account data would remain in the limelight. Overall, we continue to advise our investors to remain cautious while investing and consider companies with strong fundamentals and high dividend-yielding companies.

US tells Israel settlements serious issue

The United States has raised its concern at the highest level about Israel’s continued settlement activity, its UN envoy told the Security Council as she pledged her country’s commitment to a two-state solution and the normalization of Israeli ties in the region.

“Make no mistake, the expansion of settlements undermines the geographic viability of a two-state solution, exacerbates tensions, and further harms trust between the two parties,” Linda Thomas-Greenfield said.

She spoke in the aftermath of a dramatic spike of 303% in housing starts from the first and second quarters of 2023, according to data from the Central Bureau of Statistics published this month.

From January to March of this year, ground was broken for 255 settler homes, compared to 1,028 housing starts from April to June of the year, the CBS reported.

Despite the second-quarter rise, housing starts have dropped this year by 18.7% in the first two quarters when ground was broken for 1,283 settler homes compared with the same time period last year when there were 1,580 settler starts.

All total, there were 2,568 settler housing starts in 2023.

Israel has advanced plans this year for 12,349 housing starts, according to the left-wing group Peace Now. It’s the largest such number since the group started collecting data in 2012.

“The United States strongly opposes the advancement of settlements and urges Israel to refrain from this activity.

“We take the issue very seriously, as it undermines the possibility of a future contiguous Palestinian state, and we raise it at the highest levels on a consistent basis,” she said.

Thomas-Greenfield spoke during the UNSC’s monthly meeting Wednesday on the Israeli-Palestinian conflict, which took place amid a push for an Israeli-Saudi normalization deal and in the aftermath of Prime Minister Benjamin Netanyahu’s meeting with US President Joe Biden.

The potential Saudi agreement is a subset of a deal between Washington and Riyadh that would consist mainly of a security pact. The US-Saudi deal could also include an interim agreement with the Palestinians at a time when the Israeli government does not support a Palestinian state and supports all settlement activity.

Thomas-Greenfield in her speech also took Palestinian Authority President Mahmoud Abbas to task for his speech in August blaming the Jews for the Holocaust.

 “The sharp rise in violence by extremist Israeli settlers against Palestinians is also deeply alarming.“All perpetrators of violence against civilians, whether Israeli or Palestinian, should be held accountable according to the law,” Thomas-Greenfield stated.

“Ongoing violence sets back the prospects for peace and is responsible for so much needless suffering,” she said.

The US is deeply concerned by the levels of violence in the West Bank and Gaza and it expresses condolences for those injured or killed in the past month across Israel, the West Bank, and Gaza.

She welcomed de-escalation efforts and called on all parties to refrain from actions and rhetoric that inflamed tensions – including hateful rhetoric, settlement activity, evictions, the demolition of Palestinian homes, terrorism, incitement to violence, and Palestinian Authority payments to the families of terrorists,” she said.

Thomas-Greenfield re-affirmed the US commitment to the status quo on the Temple Mount, known to Muslims as al-Haram al-Sharif.

We oppose actions that depart from the historic status quo, or otherwise disturb the sanctity” of religious sites in Jerusalem. Such action is unacceptable, she added.

Work is underway to convene the Forum of Five – Egypt, Jordan, the US, the Palestinian Authority, and Israel – which met twice this year in Sharm el-Sheikh and Aqaba.

Thomas-Greenfield also confirmed her country’s support for freedom of movement for the peacekeeper forces on the Lebanese border and affirmed the decision taken under the Trump administration to recognize Israeli sovereignty on the Golan Heights

“Our policy in this regard the status of the Golan Heights remains unchanged from 2019,” she said.

UN Special Coordinator for the Middle East Peace Process Tor Wennesland said that from June 15 to September 19, Israeli security forces demolished 238 illegal Palestinian structures, as he noted that authorizations for structures are almost impossible to obtain.

In addition, he said, shrinking grazing land and settler violence have forced Palestinians to leave their homes in Area C of the West Bank.

In describing the violence of the last three months, he said, 68 Palestinians, including 18 children, were killed by Israeli security forces during demonstrations, clashes, security operations, attacks or alleged attacks against Israelis, and other incidents.

In conjunction, there were 10 Israelis, including one woman, two children, and three Israeli security forces personnel were killed.

Wennesland said he remained gravely concerned by the intensification of violence in the occupied West Bank and Israel – at levels not seen in decades – and the use of increasingly lethal weaponry, including in densely populated areas.

Wennesland said, “I condemn all acts of violence against civilians, including acts of terror.”He added, “I am disturbed by the high levels of settler-related violence, often in the proximity of Israeli Security Forces, with perpetrators rarely held accountable. Israel must act to stop all settler violence.”

Iran terms Netanyahu speech at UNGA a comedy show

Iran has termed speech by Israeli Prime Minister Benjamin Netanyahu at the annual meeting of the UN General Assembly a “comedy show” and utterings against its peaceful nuclear program and its regional actions “unfounded”.

In a statement released, the delegation of the Islamic Republic of Iran noted that Netanyahu had rambled on during his talks to the United Nations about the “curse of a nuclear Iran” and claimed that Tehran had spent “billions to arm its terror proxies.”

In addition, Netanyahu bragged that the scandalous Abraham Accords would herald a “New Middle East” that would bring “Arabs and Jews closer together” and bring about significant changes in the region.

“The baseless allegations made by Israeli officials no longer fool anyone. Iranophobic campaigns and widespread systematic dissemination of disinformation and unfounded allegations against Iran have always been one of the main elements of statements—or better to say, comedy shows—made by the Israeli authorities in this august body,” the Iranian delegation said.

It added, “The regime attempts to portray Iran’s conventional weapon capabilities or its exclusively peaceful nuclear program, one that is under the most robust verification of the International Atomic Energy Agency, as a challenge to regional stability; this is but a hypocritical move to distract from the real danger this regime poses to regional peace and security, particularly its nuclear-weapon arsenals, clandestine and unsafeguarded nuclear installations and activities.”

It also emphasized the Israeli regime’s checkered history of housing, funding, inciting, and arming the most deadly terrorist networks.

“The repulsive Israeli occupation has brought many crises and instability throughout the region. As such, it is ironic that the prime minister of the Israeli regime spoke about developing a regional peace initiative while his bloodthirsty regime plans to annex even more of the already occupied Palestinian territories,” the statement noted.

Netanyahu’s claim that Iranian drones were used in the conflict in Ukraine was also rejected by the delegation, which stated that “such baseless allegations, which are solely based on false flags and fabricated assumptions, are nothing more than a propaganda apparatus launched by certain States to further their political agenda.”

The statement emphasized how Israel continues to threaten regional and international peace and security by possessing all known forms of WMDs.

The delegation responded to Israel’s threats to use force against Iran by saying, “The Islamic Republic of Iran reserves its inherent right to self-defense, under international law and the United Nations Charter, to decisively respond to any threat or wrongdoing committed by the Israeli regime.”

Israel’s disruptive policies and practices were also condemned by the Iranian delegation, which said that the regime has been committing atrocities against Palestinians for more than 70 years “in flagrant violation of the basic principles of morality, humanity, and the rules of international law.”

 

Collective security alliance for Persian Gulf

Rear Admiral Ali Reza Tangsiri, the commander of the Islamic Revolution Guards Corps Navy, has put forth the idea of forming a security alliance in the Persian Gulf that would include all the countries of the region. 

He suggested that eight littoral states of the Persian Gulf should form a naval alliance to ensure regional security without the presence of outsiders.

In comments at a televised program on Sunday, Tangsiri said the Persian Gulf countries are capable of ensuring regional security through mutual cooperation within the framework of an 8-nation alliance, according to Tasnim News. 

He added that the naval alliance would help the regional people live in peace, reminding the neighboring states that the outsiders provoke Iranophobia to justify their illegitimate presence in the region.

The commander warned that the foreign military forces are in the region with the purpose of selling arms and plundering the oil resources.

In June, Shahram Irani, the chief commander of the Iranian Army’s Navy, dropped a bombshell that jolted the US into reiterating its presence in the Persian Gulf.

Irani said a maritime coalition in the north Indian Ocean will be established with the participation of Iran, Saudi Arabia, the United Arab Emirates, Qatar, Bahrain, Pakistan, and India.

“Today, the countries of the region have reached the point, where they believe, that if there is to be security in the region, it can be done and established through synergy and cooperation,” he said, adding that new coalitions are taking shape in the region and beyond in this regard. 

Irani continued, “Soon we will witness that our region will be free from any unjustified force and the people of the region will be dominant in their security field using their soldiers.”

The commander said Iran had already launched joint regional action with Oman. Saudi Arabia has entered this action, he noted. “The UAE, Qatar, Bahrain, Iraq, Pakistan, and India are also included,” Admiral Irani stated. 

He pointed out, “Almost all the countries of the north Indian Ocean area have come to believe that they should stand by the Islamic Republic of Iran and jointly establish security with significant synergy.”

The US was quick to dismiss the Iranian initiative. It described the Iranian proposed maritime coalition as defying reason.

“It defies reason that Iran, the number one cause of regional instability, claims it wants to form a naval security alliance to protect the very waters it threatens,” US 5th Fleet and Combined Maritime Forces spokesperson Cmdr. Tim Hawkins said, according to Breaking Defense.