China oil imports from Iran surge to 1.75 million bpd

According to reports, Chinese import of Iranian oil has reached a record of 1.75 million barrels per day (bpd) in August. The current figure has surpassed the previous peak of 1.66 million bpd achieved in October 2023 and is almost 50% higher compared with 1.24 million bpd in July.

Shipments into Rizhao and Dalian are significantly higher month on month, said Muyu Xu, an analyst with Kpler

“Chinese teapots see refining margins slightly improving, they now have stronger motivation to ramp up production and therefore need more feedstock,” she said.

Flows into Lanqiao/Rizhao and Dalian almost doubled compared to the previous month to 342,000 bpd and 132,000 bpd, respectively.

Oil from Iran has become the cheapest option for Chinese buyers, even more than Russia and more independent refiners are seeking barrels from the OPEC producer to boost their margins, said traders who participate in the market.

Iranian Light was last offered at a discount of US$6.0 a barrel to ICE Brent, they added, compared with a discount of less than a dollar for comparable crude from Russia.

Importers registered in China’s Shandong province were the biggest buyers of Iranian crude - masking as Malaysian - accounting for over 70% of the volume, according to customs data. Overall, eight Chinese regions including Liaoning and Henan took oil from the Southeast Asian nation, the most since October 2023.

Earlier this month, Reuters reported that Iran has also been expanding its oil destination markets as the country is pushing to send more oil to the global markets in an attempt to neutralize Western sanctions.

Iran has sent shipments of crude oil to new destinations such as Bangladesh and Oman, according to shipping sources and data cited by Reuters.

Oil sales are Iran's major revenue source and the country has been looking for ways to sidestep US sanctions on its crude exports that former president Donald Trump re-imposed in 2018 over Tehran's nuclear program.

Iran, which is exempt from output quotas set by the Organization of the Petroleum Exporting Countries (OPEC), is striving to maximize production and exports.

Former Oil Minister Javad Oji said in July that Iran was selling crude oil to 17 countries, including those in Europe, according to Mehr News Agency.

In one new trade, the Golden Eagle tanker sailed near the port of Chittagong in Bangladesh earlier this year after receiving oil from another vessel that loaded it from Iran’s Kharg Island according to available evidence based on shipping data, Claire Jungman, from US advocacy group United Against Nuclear Iran, told Reuters.

The Golden Eagle offloaded parts of the cargo to smaller tankers in ship-to-ship transfer operations around Chittagong in April, said Jungman, whose organization tracks Iran-related tanker traffic via satellite data.

The shipment to Bangladesh was separately confirmed by another oil export tracking source.

An official with state-owned Bangladesh Petroleum Corporation, which operates the country's main refinery, said it did not buy the cargo and it was difficult to establish who the buyer was.

Will Modi come to Pakistan to attend the SCO meeting?

The PML-N love for India has invited Indian Prime Minister Narendra Modi to the upcoming Shanghai Cooperation Organization (SCO) meeting in Islamabad, despite India-Israel relationship, particularly in munitions supply and ongoing genocide in Gaza.

One of the narratives is that Pakistan being the host has to extend the invitation to India, but the other narrative is that Modi should decline the invitation and send foreign minister instead.

The two countries downgraded their diplomatic ties in August 2019 and recalled their high commissioners. This is now the longest period in peacetime that the two countries have been without their top diplomats in each other’s capital.

SCO is a multilateral platform, but Modi’s presence in Islamabad would nevertheless would be seen significant. If nothing else, the sidelines of the SCO summit offer the two sides a chance to start talking about talks.

It is a harsh reality that the hawks on both sides are not interested in normalization of relationships. India considers itself a regional super power, it has joined various economic cooperation groups, but seems least interested in relations with SAARC members.

There is no denying that there are major differences between the two countries, as well as the thorny disputes that they have fought many wars on. There seems no hope of easing the tension, yet for a like SCO offers opportunity to establish working relationships.

Pakistan made the first move in May last year when then-foreign minister Bilawal Bhutto-Zardari went to Goa to attend the SCO’s Council of Foreign Ministers. Though the reception in India was far from warm despite the significance of his visit, Bilawal’s presence sent a positive signal that Pakistan remains open to engaging with New Delhi diplomatically.

The SCO is a multilateral platform and, therefore, of limited import as far as India-Pakistan ties are concerned. Still presence of Indian delegates in Islamabad should bring some positivity. If nothing else, the sidelines of the SCO summit offer the two sides a chance to start talking about talks.

 

PSX average daily trading volume up 28.5%WoW

The benchmark index of Pakistan Stock Exchange showed signs of weakness earlier in the week since Pakistan was not included in the IMF’s executive board meeting agenda, which led to a weekly loss of 0.4%WoW, closing at 78,488 points.

The Government of Pakistan (GoP) has requested Saudi Arabia to increase it’s lending by US$1.5 billion from existing US$5 billion and are also seeking US$4 billion from Middle East based commercial banks to seize the external financing gap.

The global rating agency Moody’s upgraded Pakistan’s debt ratings to Caa2 from Caa3 which instilled positivity among investors.

Market participation remained elevated, with the average daily traded volume rising to 602.12 million shares from 468.06 million shares a week ago, up 28.6%WoW.

According to news flows FBR is likely to miss August 2024 collection target by PKR50 billion.

Foreign exchange reserves held by State Bank of Pakistan (SBP) rose by US$112 million on a weekly basis to US$9.4 billion as of August 23, 2024.

During the week secondary market yields saw a marginal increase, which brought the 3-month yield to 18.05% and 1-year to 16.95%.

Furthermore, PKR largely remained stable against the greenback throughout the week, closing the week at PKR278.54/US$. 

Other major news flows during the week included: 1) Punjab extended PKR14/unit power relief to federal capital, 2) finance minister announced incentives to attract foreign direct investment, 3) CPEC debt re-profiling plan amounting to US$8 billion prepared, 4) ECC approved two remittance incentive schemes and 5) Foreign investors repatriate US$139 million in July 2024.

Jute, Transport, Exchange Traded Funds, Food & Personal care products and Textile Weaving were amongst the top performing sectors, while Textile spinning, Leather & Tanneries, Vanaspati & Allied Products, Real Estate Investment Trust and Paper & Board were amongst the worst performers.

Major net selling was recorded by Banks/DFI with a net sell of US$3.85 million. Individuals absorbed most of the selling with a net buy of US$5.84 million.

Top performing scrips of the week were: NBP, COLG, GLAXO, MTL, and MARI, while top laggards included: ABOT, AVN, SRVI, SML, and PSX.

Looking ahead, market is expected to continue its positive momentum with anticipated August 2024 lower inflation reading, upcoming MPC result and any development on the IMF deal remaining in focus.

Analysts opine that sectors benefiting from monetary easing and structural reforms would remain in the limelight. With declining fixed income yields, high dividend-yielding stocks are expected to remain favorable.

 

Women Leading Central Banks

According to the International Monetary Fund (IMF) women are leading more central banks than ever before, thanks to appointments in the past year, but recent gains still leave the share of female governors far short of parity. Before you read the details, please join me in applauding the services of Dr. Shamshad Akhtar who was appointed Governor, State Bank of Pakistan on January 02, 2006.

Dr. Shamshad Akhtar

Dr. Shamshad Akhtar took over as Governor, State Bank of Pakistan on January 02, 2006 for a three-year term. Dr. Akhtar, who is the first woman and the 14th Governor of the State Bank since its inception in July, 1948 brings rich experience, both national and international, to her new assignment.

Prior to her appointment as SBP Governor, Dr. Akhtar has been serving the Asian Development Bank (ADB) as its Director General, Southeast Asia Department since January, 2004. Earlier, she was Deputy Director General of the Department. She also held the position of Director, Governance, Finance and Trade Division for East and Central Asia Department of ADB.

Dr. Akhtar began her career in ADB in 1990 and rose to the position of Manager in 1998 after serving as Senior and Principal Financial Sector Specialist. She has been ADB’s Coordinator for APEC Finance Ministers Group from 1998-2001 and has served on a number of ADB committees including the Reorganization Committee, Appeals Committee and Oversight Committee etc. She has interfaced and represented the Asian Development Bank at the Bank for International Settlements and the International Organization of Securities Commissions (IOSCO). She has developed a broad regional expertise in financial and economic matters of Central Asian Republics & Southeast Asia including the People’s Republic of China.

Before joining the ADB, Dr. Akhtar worked for 10 years as an Economist in the World Bank’s Resident Mission in Pakistan. In Pakistan, she also worked briefly with the Planning Offices of both the Federal and Sindh Governments. She dealt with wide ranging subjects which covered analysis of macroeconomic situation, finance and money and structural reforms of key sectors including industry and agriculture. Her work included papers on taxation system of Pakistan, state of inter-governmental fiscal relations, poverty incidence & its dimensions and foreign direct investment etc. Dr. Akhtar also contributed to the development of diversification of financial markets including the analysis of monetary policy and state of banking industry (at the World Bank) and restructuring of the Securities & Exchange Commission, Insurance Commission and worked closely with the private sector including the stock exchanges of Pakistan. She has been advising the central banks on reforms of financial markets. Dr. Akhtar has also been dealing with the banking sector’s legal, regulatory and institutional reforms while advising on diversification of the industry to exploit long term funding through development of bond market.

Born in Hyderabad, Dr. Akhtar had her earlier education at Karachi and Islamabad. She has had an excellent academic record. She graduated from the University of Punjab with a B. A. Economics degree in 1974. Dr. Shamshad Akhtar has an M.Sc. in Economics from the Quaid-e-Azam University, Islamabad, an M.A. in Development Economics from the University of Sussex in 1977 and a Ph.D. in Economics from the U.K.’s Paisley College of Technology in 1980. She is a post-doctoral fellowship Fulbright Scholar and was a visiting fellow at the Department of Economics, Harvard University in 1987.

Dr. Akhtar has presented numerous papers on economics and finance at international conferences/seminars/symposia. Her research interests are on Monetary and Fiscal Policy, Banking and Capital Market, International Finance Architecture, Regulation and Supervision, and Industrial & Corporate Restructuring.

The number of women in governor roles rose to 29 this year from 23 last year, though that left the share of female leaders at just 16% of the world’s 185 central banks, according to an April report by the Official Monetary and Financial Institutions Forum. Greater gender balance in senior positions may help increase the diversity of thought and checks and balances, in turn contributing to increased economic and financial stability and improved performance, IMF research shows.

Appointments this year in Bosnia and Herzegovina and Papua New Guinea are examples of how smaller economies are driving more progress on gender balance, according to OMFIF, a London-based think tank for monetary, economic and investment issues.

This year’s rise was the biggest gain in more than a decade of surveys, but the Chart of the Week shows how central banks still have much room to make progress toward greater parity in the ranks of top policymakers steering the global economy.

The tally adds to evidence of the struggle of women at central banks as well as in the economics discipline, where they remain underrepresented even after steady gains.

A first-of-its-kind IMF survey of the European Central Bank and its Group of Seven counterparts showed last year that fewer than half of employees at those institutions are women, but on average only a third of women are economists or managers. This survey underscores how policies to eliminate gender gaps have been only partially successful.

ECB Executive Board member Isabel Schnabel has cited a substantial gender imbalance in economics—one that the institution is determined to change among its own staff. Schnabel noted in a 2020 speech that the barriers aren’t insurmountable, and that mentoring opportunities and ensuring childcare can help narrow gender imbalances. 

The latest additions to the list of countries naming a woman as central bank chief came in January, when Jasmina Selimović began a six-year term in Bosnia and Herzegovina and Elizabeth Genia was appointed to the top job after serving as acting governor. Last year, Michele Bullock became the first woman to lead the Reserve Bank of Australia.

Cambodia, Georgia, Moldova and Montenegro also appointed women as the heads of their monetary authorities last year, according to OMFIF’s 2024 gender balance index. 

 

Israel-Lebanon escalation to weigh on Kamala

Escalation of conflict between Israel and Lebanon’s Hezbollah leading to higher oil prices and inflation could weigh on the popularity of US Presidential candidate Vice President Kamala Harris, reports ZAWYA.

The resulting uncertainty in the region would lead to higher oil prices and inflation, which could make Kamala less popular, Yoel Sano, head of global, political and security risk, BMI, said.  

Republican candidate, Donald Trump is likely to be less critical of Israel and Saudi Arabia, while Kamala is, rhetorically at least, more sympathetic to the Palestinian cause, experts said.

Should Trump return to the White House, Sano said a nuclear deal with Iran is ‘not impossible’ under his leadership.

But there is a matter of willingness on the Iranian side, and a Kamala presidency would be ‘more conducive’ to re-starting talks, Sano said, as well while Trump did not object to a nuclear deal in principle, he objected to a deal signed by President Barack Obama in 2015. 

“Iran is potentially undergoing a leadership transition. The supreme leader Ayatollah Ali Khamenei is 85 and has been in office 35 years.

“In this context, his would-be successors are unlikely to want to be seen as soft towards the US by rushing towards a new nuclear deal with the US,” he said.

While the Israel-Hamas conflict is likely to take ‘many months’ to resolve, BMI would expect it to be over by the time the new Presidential term starts in January 2025, Sano said.

Both Kamala and Trump continue to favour the process of normalization of relations between Israel and Saudi Arabia, which has been delayed by the Israel-Hamas conflict, he said, adding that it is unclear when progress can be made.

While escalation of Israel and Hezbollah hostilities would weigh heavily, BMI last month put likelihood that escalation would happen at 30%, with both sides unlikely to want it due to factors including increased domestic tensions and economic costs.

Tension between the two sides flared at the weekend, but analysis from S&P Global Market Intelligence said the exchange of fire was unlikely to grow in scope.

BMI projections for the US election, which is due to take place in November, showed a tight 50–50 race between Trump and Kamala, with Kamala perceived as a "highly energizing candidate" compared to Biden, Iris Malone, BMI’s director, political science, data modelling, said.  

Prior to her entering the race, polling on Democrat party voter enthusiasm was 36% in April, but it has jumped to 85% for Kamala, she said.

 

Iran appoints female government spokesperson

President Masoud Pezeshkian has appointed Fatemeh Mohajerani as the new spokesperson for the Iranian government on Wednesday. The appointment marks a historic first, as Mohajerani becomes the first woman to hold this position in Iran.

Mohajerani, born in 1970 in Arak, holds a Doctorate of Business Administration from Heriot-Watt University Edinburgh Campus. She served as the head of the Technical and Vocational Training University of Shariati (special for females) in Hassan Rouhani’s government. Mohajerani was also elected as the head of the Center for Brilliant Talents in 2017. 

In addition to this appointment, the cabinet meeting also saw the appointment of Elias Hazrati, a former member of the Iranian Parliament, as Chairman of the Government's Information Council. 

 

Namibia blocks vessel carrying munitions

According to a BBC report, a vessel MV Kathrin, en route from Vietnam, was blocked from docking in Namibia on suspicion of carrying military cargo for Israel’s ongoing war against Hamas in the Gaza Strip.

The ship was stopped due to “explosive material destined for Israel,” Namibian Justice Minister Yvonne Dausab claimed. The ship, which left from Vietnam, had requested to dock at Walvis Bay before continuing north towards the Mediterranean.

Walvis Bay, Namibia's largest commercial port, is located on the western side of the African continent. It handles nearly 900 vessels and about eight million tons of cargo each year, the BBC cited the Namibian Ports Authority (Namport). The MV Kathrin was set to dock there on Monday but was stopped.

Justice Minister Yvonne Dausab said this was in line with Namibia's support for the Palestinian people and its call to end the violence in Gaza, as reported by the state-run New Era news website.

The report noted that the reason for the MV Kathrin's request to dock was initially uncertain, as ships on long voyages often stop for supplies, rest, or cargo exchanges.

Citing a police investigation, Dausab later confirmed that the MV Kathrin was "indeed carrying explosive material destined for Israel" and was thus barred from entering Namibian waters.

She stressed that Namibia is committed to avoiding involvement in "Israeli war crimes, crimes against humanity, genocide, as well as its unlawful occupation of Palestine."

The BBC noted that the Economic and Social Justice Trust (ESJT) welcomed the decision, with Herbert Jauch saying they are pleased that our government has decided to respect international law and not be complicit in genocide."

Namport, which had not responded to the BBC before Dausab's statement, mentioned it had not received the required pre-clearance documents but promised to ensure "effective safety and security of our territorial waters and ports" while supporting Namibia's international viewpoint on the ongoing conflict.

In their report, the BBC noted that Namport had earlier allowed another vessel with dangerous cargo to pass through but not dock.

Rights groups warned that allowing the vessel to dock could involve Namibia in possible human rights violations.