Pakistan: Current Account turns negative

Pakistan’s current account (CA) posted the first deficit in four months in May 2024, of US$270 million against a surplus of US$499 million a month ago.

CA deficit during 11MFY24 grew to US$464 million against a deficit of US$3.8 billion in the corresponding period last year.

A large primary income deficit of US$1.4 billion was the key reason behind the negative figure, without which CA balance would have been comfortably positive, despite a wider good trade deficit.

The primary deficit ballooned to US$1.4 billion (highest ever level) due to US$1.5 billion worth of payments. These payments included interest on foreign debt and backlog of dividends of multinational companies. As per the central bank, the latter has been nearly completely settled; hence the primary income deficit should moderate to around US$500 million in the coming months.

Goods trade deficit was reported at US$2.0 billion in May, higher than US$1.8 billion in April and doubling YoY. 

Imports of US$5.0 billion were at the highest level in FY24 to date, up 13%MoM and 35%YoY.

The sequential growth in imports was led by seasonally higher petroleum imports (up 8%MoM) and 12% higher machinery imports. Iron & Steel imports (scrap and other raw materials) rose 40%YoY.

This is also seasonal and does not point to a sustainable rebound in construction activity (down 3%YoY in 11MFY24). 

Exports were up a healthy 17%YoY, mainly driven by exports of textiles (up 18%YoY, seasonal) and food (up 55%YoY. Rice exports doubled YoY).

Remittances in May were an impressive US$3.2 billion, up 15%MoM and 54%YoY, ahead of the Eid-ul-Adha holidays, likely to normalize to around US$2.5 billion in the coming months, in our view.

SBP’s Forex reserves were reported at US$9.1 billion

SBP’s Forex reserves remained flat around US$9.1 billion by mid-June 2024, equivalent to just about two months’ imports.

The SBP began cutting interest rates in June, by 150bps, taking the policy rate to 20.5%.

Many industries (cement, autos, steel) are operating at very low utilization levels (50-60%); any likely increase in imports could increase trade deficit.

Tough budgetary measures for the real estate and textile industries may extend the spell of weak demand a few more months (keeping the growth in imports moderate).

CAD crossing US$500 million is a key risk and can have negative implications for the exchange rate, inflation and monetary policy,.

 

Israeli ships targeted by resistance groups

The recent joint military operations carried out by regional resistance groups against Israeli ships have demonstrated a growing sense of solidarity and sent a powerful message of unity amid the regime’s genocidal war on Gaza.

Yemen’s Ansarullah movement and the Islamic Resistance in Iraq, which is an umbrella group of anti-terror fighters in the Arab country, have conducted the operations. 

The Islamic Resistance in Iraq confirmed on Sunday that it had hit four ships in the Israeli port of Haifa and one ship in the Mediterranean through joint drone attacks with Ansarullah. The vessel that was hit in the Mediterranean was sailing to Haifa Port.

It said the military operations were launched in solidarity with the people of Gaza and vowed to continue attacks against the enemy's strongholds, which is a reference to Israeli interests. 

The Ansarullah movement also confirmed the joint attacks. 

“The two operations successfully achieved their goals, and the strikes were precise and direct," the spokesman for the Yemeni armed forces said. 

Yahya Saree also said on Saturday that the Yemeni army targeted the US aircraft carrier Eisenhower in the Red Sea with missiles. 

He said the move was in line with efforts to express solidarity with Palestinians in Gaza. Saree noted that the attacks were also a response to American and British strikes against Yemen. 

The Yemeni and Iraqi resistance forces have been hitting Israeli targets since the regime declared war on Gaza on October 07, 2023. 

The Yemeni army has launched several drone and missile attacks against Israeli ships and vessels affiliated to the regime in the Red Sea since November.

The Ansarullah said it would stop the attacks if Israel ended its relentless air and ground attacks on Gaza. 

Nonetheless, the US and the UK chose to escalate the situation after they began strikes against Yemen in early January in response to the targeting of Israeli vessels. 

This prompted the Ansarullah movement to order the army to target American and British warships in the Red Sea over the complicity of London and Washington with the Tel Aviv regime’s crimes against Palestinians. 

The US and UK attacks against Yemen have not only failed to deter the country from targeting Israeli interests, but they have also led to greater unity among the axis of regional resistance. Growing unity among resistance groups was thrust into the spotlight after the Islamic Resistance in Iraq and the Ansarullah movement teamed up to target the Israeli ships. 

More than 260 days have passed since Israel began the onslaught, which has claimed the lives of about 37,600 Palestinians. But the regime has failed to eliminate Hamas which has been its main military goal since the war erupted. 

According to Rear Admiral Daniel Hagari, the Israeli military spokesman, “This business of destroying Hamas, making Hamas disappear — it’s simply throwing sand in the eyes of the public…. Hamas is an idea; Hamas is a party. It’s rooted in the hearts of the people — anyone who thinks we can eliminate Hamas is wrong”. 

Israel has suffered crushing blows at the hands of Hamas fighters in the Gaza battlefield. Israel’s warmongering against Lebanon’s Hezbollah has also brought the regime nothing more than humiliation.  

Both Israel and its Western allies, in particular the United States, have been under the illusion that they are able to eliminate regional resistance groups through military means. 

The US has repeatedly targeted resistance groups in West Asia that are opposed to Israel’s war on Gaza and Washington’s support for the regime. These American strikes have been aimed at deterring the groups from conducting military operations against the US and its protégé, Israel. 

However, growing resistance against the US hegemony and Israel’s occupation and savagery has clearly shown that Israelis and their Western masters are just building castles in the air. 

Iran on top in Gas Exporting Countries Forum

Iranian Oil Minister Javad Oji said on Saturday that the Islamic Republic has outpaced Qatar in gas extraction from joint fields by 100 million cubic meters (mcm), reports IRNA.

“We set an unprecedented record in gas production, and Iran has been ranked first among the Gas Exporting Countries Forum (GECF) members in terms of gas production increase; the average growth of the countries was equal to 2.5%, and Iran ranked first with 5% gas production growth,” Oji said.

“In the South Pars joint field, we extract 75 to 100 million cubic meters of gas more than the Qatari side,” he added.

The official noted that the oil ministry has signed deals worth US$20 billion with major holdings to boost the recovery factor of the giant field’s wells.

South Pars gas field, which Iran shares with Qatar in the Persian Gulf, is estimated to contain a significant amount of natural gas, accounting for about 8% of the world’s reserves, and approximately 18 billion barrels of condensate.

The huge offshore field covers an area of 9,700 square kilometers, 3,700 square kilometers of which are in Iran’s territorial waters in the Persian Gulf. The remaining 6,000 square kilometers, called North Dome, are situated in Qatar’s territorial waters.

Last week Oji said that over the first three years of the 13th administration in office, 150 oil industry projects, worth US$34 billion, have become active.

Speaking during the signing ceremony of developing two oil fields on June 16, he commemorated the memory of late President Ebrahim Raisi, noting that developing least developed regions of the country and creating jobs for the people living in those areas was the top priority of the late president.”

The majority of 153 projects that came to fruition were projects that had been ignored before the 13th administration took office, including South Pars gas field phase 11 which its development contract was exchanged for 20 years between the related sides, but when the 13th administration took office it decided to start its development which is now complete and operational, the Minister of Petroleum said.

Oji added, the country managed to acquire good revenues by implementing these kinds of projects in the oil, gas, refining, and petrochemical sectors. 

According to him, while the oil industry’s growth stood at 10% two years ago it reached 20% last year; the highest rate of growth among all sectors of the economy.

The oil industry has 300 projects on the agenda of which 80 projects are new ones, he said adding total value of these projects reaches US$130 billion, some of them are now operational.

Referring to cooperation with Russia, he said a satisfactory basis had been laid for expanding relations with Russia and we will hear good news in this regard in the future.

The 13th administration so far has signed US$5 billion dollars of oil contracts with Russian companies and 250 thousand barrels of oil per day the country produces, comes from the contracts have been already signed with Russian companies, Oji said.

The official also said that the United States can no longer prevent the export and production of Iran's oil.

“With the measures that have been taken in President Raisi's government in the field of the oil industry, I should announce that any government that comes to power in the US cannot prevent the export and production of Iranian oil,” Oji said while speaking at a parliament open session on Wednesday morning.

In his remarks, Oji highlighted the efforts of the 13th Iranian administration in improving the situation of the production and export of oil.

 

Speculation about Trump’s running mate

Former President Donald Trump told reporters Saturday he’s made up his mind about who will be his running mate in November, but he has yet to tell anyone who it is.

Trump told NBC News ahead of a rally in Philadelphia that he’s settled on a vice presidential choice.

“In my mind, yeah,” Trump said when asked if he’s decided.

Asked if his pick knows it’s them, Trump responded, “No, nobody knows.”

The selection process for Trump’s running mate has ramped up in recent weeks as several candidates received vetting materials from the campaign. Trump has said he may announce his choice at the Republican National Convention in Milwaukee next month.

Sources familiar with the process told The Hill the front-runners for the position are North Dakota Gov. Doug Burgum, Sen. J.D. Vance and Sen. Marco Rubio.

Others who received vetting materials and are under consideration include Sen. Tim Scott, Sen. Tom Cotton, Rep. Elise Stefanik, Rep. Byron Donalds  and former Secretary of Housing and Urban Development Ben Carson.

Trump has praised each of those individuals at various times, though he has downplayed the impact his selection might have on the end result in November.

“It’s never really had that much of an effect on an election,” Trump told Fox News earlier this year.

 

US to back Israel in war with Hezbollah

Senior US officials assured a delegation of top Israeli officials visiting Washington this week that the Biden administration is fully prepared to support its ally in case of a full-scale war with Hezbollah, reports CNN.

The Biden administration has consistently claimed that it wants to avoid a war between Israel and Hezbollah, advocating for diplomatic de-escalation. This week, US envoy Amos Hochstein was sent to the region in an attempt to supposedly help ease tensions.

The media outlet noted that top Israeli officials, including Minister of Strategic Affairs Ron Dermer and National Security Advisor Tzachi Hanegbi, held meetings with Biden administration officials such as National Security Advisor Jake Sullivan, Secretary of State Antony Blinken, and White House Middle East Coordinator Brett McGurk.

Sources revealed that the Israeli and American officials discussed various topics, including the situation along the border with Lebanon, Iran, and ceasefire and prisoner exchange negotiations.

The senior administration official mentioned that US officials emphasized that the Biden administration would provide Israel with the necessary security assistance, but noted that American troops would not be deployed on the ground.

The official indicated that in this week's meetings US and Israeli officials discussed potential strategies to reduce tensions along the Blue Line separating southern Lebanon and northern occupied Palestine, including discussions on returning displaced Israeli settlers and Lebanese citizens to their homes.

The talks coincided with Israeli Prime Minister Benjamin Netanyahu's public accusations that the US was withholding weapons and ammunition from Israel, leading to a tense exchange between Israeli and US officials.

On Wednesday, Hezbollah Secretary General Sayyed Hassan Nasrallah warned that the possibility of invading al-Jalil remains on the table should the confrontation with Israel escalates on the borders with northern occupied Palestine.

"The enemy knows it must expect us on land, in the air, and at sea, and if war is imposed, the Resistance will fight without constraints, rules, or limits," he made it clear during the memorial service for senior Hezbollah commander Sami Taleb Abdallah and his companions, who were martyred days earlier in an Israeli strike in southern Lebanon.

A day before, the Military Media of the Islamic Resistance in Lebanon - Hezbollah published footage showing its reconnaissance drones flying over swathes of occupied Palestinian land, including Kiryat Shmona, Nahariya, Safad, Karmiel, Afula, all the way to Haifa and its port.

Titled "This is what the Hoopoe came back with," the nine-minute-and-a-half video captured footage and exposed sensitive Israeli sites. Hezbollah indicated that the video was only the first episode of more yet to come, highlighting that the drones bypassed Israeli air defenses and returned to Lebanese airspace undetected.

Shortly after Hezbollah published the video, the Israeli military said that operational plans for an offensive in Lebanon were approved and validated. Senior Israeli commanders also decided to accelerate the readiness of the forces on the ground, according to the military statement.

 

Trump points the cause of Ukraine conflict

Russia’s intervention in Ukraine was triggered by the irresponsible and provocative rhetoric of US President Joe Biden and his administration about Kiev joining NATO, said Donald Trump.

Trump, who is seeking a rematch with Biden for the presidency in November, made the comments during a conversation on foreign policy with ‘All-In’ podcast co-host David Sacks on Thursday.

“For 20 years, I heard that if Ukraine goes into NATO, it’s a real problem for Russia. I’ve heard that for a long time. And I think that’s really why this war started,” Trump said. 

The Republican presidential candidate pointed out that there had been no talk about armed conflict between Russia and Ukraine when he was in the White House, but as soon as Biden replaced him, things began to deteriorate.

“I thought that Russian President Vladimir Putin may be – well, look, he’s a good negotiator, I thought he was going to be doing that for negotiation purposes,” Trump said. “Then all of a sudden, they attacked, and I said, ‘what’s going on here?’” 

According to the former president, one of the key issues was the rhetoric coming out of the White House.

“Biden was saying all of the wrong things. And one of the wrong things he was saying ‘no, Ukraine will go into NATO’,” Trump said.

Sacks pointed out that in January 2022 or thereabouts, US Secretary of State Antony Blinken told Moscow that Ukraine would join NATO and that Washington thought it was OK to put nuclear weapons there. “So no wonder the Russians hit the roof,” he noted.

“Well, let’s say you were running Russia. You wouldn’t be too happy,” Trump replied. “And that’s always been off the table. It’s always been understood that that was a no-no,” he added, addressing Kiev’s potential NATO membership.

Floating the idea of Ukraine in NATO was “very provocative,” Trump said. “And now it’s even more provocative. I hear routinely they’re now talking about Ukraine entering NATO. And now I hear France wants to go in and fight. Well, I wish them a lot of luck!”

Putin has specifically pointed to Western statements about Ukraine’s possible membership in the US-led bloc as a security threat Moscow could not ignore. Ukraine’s neutrality has been one of the non-negotiable Russian conditions for the conflict to end.

NATO has argued that its “open door” policy is essential and that no one had the right of veto over it, but also that its expansion eastward was not the cause of the conflict. 

In an interview with Time magazine earlier this month, Biden claimed that the US is “the strongest nation” because of NATO expansion, and that he told Putin he would get “NATOization of Finland” instead of “the Finlandization of NATO” during their June 2021 summit in Switzerland.

Russia’s intervention in Ukraine was triggered by the irresponsible and provocative rhetoric of US President Joe Biden and his administration about Kiev joining NATO, Donald Trump has said.

 

 

 

Russia: Gazprom boosts oil trade

Russian gas giant Gazprom fresh from an annual loss of US$7 billion, has increased its activity in the oil business to offset weaker natural gas trade over the past year, reports Reuters.

Kremlin-owned Gazprom has suffered from the loss of the European gas market, once the source of around two-thirds of its gas revenue, due to a deep rift between Russia and the West over the conflict in Ukraine.

It also cut natural gas production by 13% to an all-time annual low of 359 billion cubic meters (bcm) in 2023 from 412.94 bcm in 2022.

Gazprom's oil arm, Gazprom Neft has fared better than the parent company thanks to the flourishing oil business.

Now Gazprom Group, via its Gazprom Export division, is trying to raise its exposure to the oil business and increased handling of Asia-bound ESPO oil grade as well as Siberian Light oil exports.

Russian oil exports have been a stable profit maker for Moscow during the past two years despite Western sanctions, as Russia was able to diver to India and China.

Gazprom Export, which was a minor oil exporter prior to 2022, has boosted oil exports in the second half of 2023 and plans to increase shipments even more in 2024.

Gazprom's oil pipeline exports have doubled in 2023 and are expected to double again in 2024.

Russia's Pacific port of Kozmino is a key outlet for Gazprom's crude exports. ESPO Blend oil exports provide one of the best revenues for Russian oil producers compared to other routes thanks to premium quality of the grade and proximity to main customers in Asia.

Gazprom's oil loadings from Kozmino have jumped from between 30,000 metric tons and 50,000 tons per month last year to around two to three 100,000-ton vessels per month this year. These volumes are supplied in addition to the exports of Gazprom Neft, which is also an ESPO Blend oil exporter.

In May 2024, Gazprom also loaded 80,000 tons of Siberian Light grade from Novorossiisk and the company plans to continue diversifying its oil supply.

In May, the company started production at the Urengoysky oilfield that is expected to produce 1.5 million tons of condensate per year.