Turkey warns oil shippers

Turkey warned the oil shippers they will need to prove they’re insured to cross the country’s vital straits, a move that could restrict flows of Russian oil as new European sanctions kick in.

The new rule starts December 01, 2022 a few days before the European Union and UK impose additional curbs on Russian trade that will make it much harder for tankers carrying the nation’s oil to get insurance. 

The insurance covers everything from oil spills to collisions, Turkey is in effect seeking to protect its waters, but it could also affect the flow of millions of barrels of Russian crude exports.

Ships hauling oil through the waterway and the nearby Dardanelles strait will be required to provide a letter from their insurer saying that cover will be provided for that specific vessel voyage and cargo, the Turkish Ministry of Transport said in a circular.

The European Union and the UK commence aggressive sanctions on Russian oil shipments on December 05, 2022 that will dramatically affect the availability of industry standard insurance. 

Russia shipped almost 650,000 barrels a day of its own oil through the straight from its Black Sea port of Novorossiysk over the past six months, loading programs compiled by Bloomberg show. A nearby Russian port exported almost 1.3 million barrels a day of cargo from Kazakhstan.

A director from the Turkish institution governing maritime traffic confirmed the letter, and said the motive behind it was to comply with EU sanctions even though Turkey is not part of them. 

The director said the move could well impact Russian tankers if they struggle to obtain the necessary protection and indemnity insurance, which covers owners against liabilities such as oil spills. The measure should boost maritime safety along the Turkish straits, he said.

Under the EU and UK sanctions, vessels will still be able to get industry standard cover, provided the cargoes being transported are purchased below a yet-to-be-determined price cap.

If ships sail through the straits uninsured, there could be significant damage to the waterway and vessel traffic could come to a standstill if an uninsured ship has an accident, the circular said. As a result, a letter guaranteeing insurance cover is considered a solution to this problem, it added. 

The International Group of P&I Clubs is based in London and organizes the cover of 95% of the global tanker fleet. It’s also reliant on Europe for reinsurance.

 

Biological war suspected in Syria and Lebanon

Cholera continues to sweep through Syria and Lebanon at an alarming pace, leaving thousands sick and hundreds dead. The number of cases of the bacterial disease in both countries is steadily increasing, with UNICEF estimating the total in Syria at 35,569 while the Ministry of Public Health puts that in Lebanon at 3,369. 

According to the European Union, the causes of the outbreak in Syria include drought, economic decline, and the battered state of the country’s water infrastructure, which leaves 47% of the population relying on unsafe sources of water for their daily needs.

Cholera is contracted by ingesting contaminated food or drinking water and causes intestinal problems and dehydration that can be fatal unless treated quickly. The key to fighting off the disease is good hygiene and clean water, yet in some remote and undeveloped areas in Syria access to these is scarce, meaning there is a real chance that the number of cases could soar.

In late September thousands of people across Syria started complaining of acute diarrhea, and the number of cases has grown steadily since.

According to the International Rescue Committee (IRC), part of the cholera outbreak was due to cowboy merchants near the Euphrates River running a water scam, whereby they sold unclean water from unregulated trucks and billed it as clean.

Syria’s problems with water treatment are far broader and largely due to the impact of the decade-long war: Nearly two-thirds of the country’s water plants, half of its pumping stations, and one-third of its water towers have been damaged because of the conflict.

The unofficial total is thought to be higher — and 35,000 suspected cases. The scale and speed of the outbreak has prompted the EU to act, providing €700,000 in humanitarian aid to contain the epidemic. 

Cholera spreads into Lebanon

As the outbreak in Syria has grown, cholera has spread to neighboring Lebanon, which itself suffers from an economic collapse, an ongoing political crisis, and a plethora of other problems.

The transmission of the disease has been facilitated by the free movement between the two countries. Lebanon is home to a large number of Syrian refugees, estimated at 1.5 million, or one-fourth of the total population.

After cholera spread to Lebanon, the World Health Organization (WHO) assessed the risk of an outbreak there as high due to the shortage of drinking water and the country's fragile and strained health system. A lack of electricity and a significant shortage of fresh water in Lebanon have placed further pressure on the system.  

The first cases in Lebanon were reported in early October. Speaking about them at the time, Lebanese Health Minister Firas Abiad said, “The common point between these cases is the majority of patients are displaced Syrians.” He added, “The absence of basic services, like safe water and sewage networks, in places where refugees gather constitutes a fertile ground for the epidemic too.”

According to official figures from Lebanon’s Ministry of Public Health, as of Nov. 13 around 3,369 people have been infected and 18 have died in the first cholera outbreak in the country in more than 30 years.

UNICEF has taken rapid action to help with the effort in Lebanon, distributing 80,000 liters of fuel to water pumping and wastewater treatment stations in locations with confirmed and suspected cases, as well as procuring emergency medical supplies to treat cholera, such as oral rehydration salts and treatment kits.

The WHO has also gotten involved, helping to arrange a shipment of 600,000 doses of cholera vaccine. A vaccination campaign in Lebanon was launched on November 12, 2022 targeting both Lebanese and refugees.

The epidemic is spreading quickly in both countries and threatens to plunge Syria and Lebanon into more uncertainty, despair, and crisis. Unless the fundamental drivers are addressed and water treatment plants and facilities, especially in Syria, are improved, outbreaks will no doubt reoccur in the future with regularity.

Pakistan Stock Exchange witnesses 25.8%WoW decline in average daily trading volume

Uncertainties regarding the country's liquidity position and ongoing political uncertainties kept the market range bound during the week ended on November 18, 2022, with the benchmark index settling down by 362 or 0.84%WoW at 42,730 points.

Participation in the market was substantially low this week, with daily traded volumes averaging 186.3 million shares during the week as compared to 251.1 million shares in the prior week, depicting a drop of 25.8%WoW. Moreover, the PKR lost footing against the US$ in the week, depreciated 0.68% over the period.

Other major news flows during the week were: 1) Talks between IMF and Pakistan rescheduled, 2) visit of Saudi Arabia's Crown Prince to Pakistan postponed, 3) Remittances recorded at USD2.2 billion for the month of October 2022, 4) World Bank agreed to provide US$1.3 billion to Pakistan for emergency, agriculture and housing relief, 5) GoP raised PKR757 billion from T-Bills auction, 6) LSM posted a 0.4%YoY decline in first quarter of current financial year, 7) July-October textiles and clothing exports down 1.34%YoY, and 8) Circular Debt Management Plan turned down by the Finance Ministry.

Top performing sectors were: Leasing, Chemicals, and Fertilizers, while the least favorite sectors were: Miscellaneous, Vanaspati & Allied Industries and Sugar & Allied Industries. Stock-wise, top performers were: LOTCHEM, FCEP, ENGRO, GHGL and TRG, while laggards included: UNITY, PSEL, KTML, GATM and ILP.       

The market is expected to remain range-bound in the near future, clouded by concerns regarding the liquidity position of the country (International Sukuk maturing on December 5, 2022) and the outcome of the IMF discussions. Furthermore, the capital markets would be taking further cues from the Monetary Policy announcement, scheduled for November 25, 2022.

Any news regarding foreign inflows will be well-received by the market, easing off sovereign liquidity concerns. Moreover, the economic slowdown in the country-an intended outcome
of the SBP's contractionary policies-and post-flood slowdown in economic activity is likely to keep corporate earnings subdued going forward. Investors are advised to stay cautious while building new positions in the market.

Mexico urges US and Canada firms to participate in lithium market

Mexican President Andres Manuel Lopez Obrador said his administration will issue a call for US and Canadian companies to participate in the country's incipient lithium market.

Though Mexico does not currently produce lithium, the finance ministry estimated the value of Sonora lithium reserves at US$600 billion.

Mexico does not yet have commercial lithium production; though close to a dozen foreign companies hold contracts to explore potential deposits.

"In all cases there must be associations of the public company with private entities and we do not want lithium to be taken out of Sonora," he said at a regular news conference, referring to government plans to exploit the mineral in the northern Mexican state.

The role of foreign companies will be centered in building infrastructure and state entities will hold the majority stakes in the projects, he added.

Lithium will be used for purposes such as the production of electric car batteries, but only factories installed in Sonora will be able to take advantage of the mineral, Lopez Obrador noted.

The president has urged the private sector to work with the new state miner, saying the size of the investment needed means the government needs partners.

Nonetheless, analysts argue that companies are more likely to focus near-term investments in Chile or Argentina's sprawling salt flats, where industries are more established and policies more market-friendly.

Lopez Obrador nationalized Mexico's lithium deposits in April, hoping to cash in on surging demand for the metal.

 

 

 

Global slowdown impairing Pakistan’s external trade

Pakistan Bureau of Statistics has released its monthly exports and imports numbers for the month of October 2022. The data showed country’s trade deficit shrinking 19.8%MoM and 40.4%YoY during the month under review. On cumulative basis, the trade deficit has eased off by 26.2%YoY during 4MFY23.

The improvement in balance of trade during 4MFY23 largely comes on the back of easing import bill, which has come off by 12.4%YoY during the period under review to clock in at US$21.1 billion. Exports have actually posted a slight increase of 1.1%YoY to settle around US$9.6 billion.

Country’s largest export oriented sector, Textiles and clothing has reported a decline of 1.3%YoY during 4MFY23 and remained at US$5.9 billion as compared to US$6.0 billion during the same period of last year.

Cotton yarn exports registered 27.7%YoY decline in July-October to US$285.315 million as compared to US$394.8 million during the same period last year.

Bed wear exports declined by 9%YoY to US$1.0 billion from US$1.1 billion during the same period.

As against this, Knitwear exports increased by 7%YoY to US$1.7 billion which contained the overall decline in textile exports.

Moving forward, the outlook of textile exports remain hazy owing to unavailability of gas to the sector during winters and a global slowdown expected to impact demand.

Country’s import bill continued to contract, declining by 16%YoY owing to slowdown in economy and high base effect.

The largest declines were registered in the categories of Petroleum and machinery groups imports, posting declines of 47%YoY and 40%YoY respectively and were the key reason for an overall decline in imports.

Food imports grew by 10%YoY during the period under review to US$3.4 billion owing to higher Wheat (local crop destruction) and Palm Oil imports (shift from crude imports to refined imports).

With global economy heading towards a slowdown as the major central banks around the world jack up their interest rates, the quantum of world trade is likely to contract significantly.

The global commodity prices are also likely to ease off significantly which bodes well for Pakistan.

Conversely, the country’s exports will also contract as the country’s largest export oriented industry struggles against the unavailability of gas. Consequently, analysts expect FY23 to close with a CAD of 3% of GDP.

Nancy Pelosi era comes to an end

After leading the Democrats for the last two decades, the House Speaker announced Thursday that she will step down next year from her spot at the top of the party. It is a momentous run for the most powerful woman in the US history, clearing the way for a younger generation of up and coming lawmakers to climb into the leadership ranks.

The announcement, which came shortly after late midterm results had officially flipped House control to the Republicans, sent shockwaves across Capitol Hill, as lawmakers in both parties grappled with the thought of a Democratic House without Pelosi at the helm. 

Yet the departure is only partial, Pelosi may cede her formal leadership seat, but will remain in Congress indefinitely, where she’s aiming to assume a mentorship role and grease the transition for whichever new leader fills the mantle. Such a role would be unprecedented in modern memory — most leaders who step down quickly leave Congress — but Pelosi is not one to do things by the book. 

The House chamber during Pelosi’s speech was a study of partisan contrasts. While her Democratic allies packed into their side of the chamber, filling almost every seat, the Republican side of the chamber was virtually empty — a sign of just how polarized Congress has become in recent years.  

Only a handful of GOP lawmakers were on hand for the speech, including Joe Wilson, Tim Burchett, Doug LaMalfa and Young Kim. But a vast majority of Republicans skipped the event, including House Minority Leader Kevin McCarthy. Only one member of the GOP leadership team was on hand, Steve Scalise, the Republican whip, who gave Pelosi a standing ovation at the end. Burchett and LaMalfa later hugged Pelosi. 

Her announcement ends the perennial speculation game surrounding the future of Capitol Hill’s single most powerful lawmaker, and she kept them guessing to the very last. 

After Democrats had staved off a red wave in this year’s elections, there was plenty of talk that Pelosi could remain in power, if she chose, even despite a previous pledge to step out of leadership at the end of this term.

In the end, Pelosi suggested her decision to exit hinged more on the recent assault on her husband, Paul Pelosi, who was bludgeoned with a hammer last month at the family’s San Francisco home by an intruder whose intended target, police said, was the Speaker. 

By remaining in Congress outside of leadership, Pelosi can remain influential as an adviser, fundraiser and vote getting whip while taking a foot off the gas of her famously frenetic schedule — a hybrid role that will allow her to spend more time with her recuperating husband. 

Pelosi has led the House Democrats since 2003, marking the longest leadership run in either party since the legendary tenure of Sam Rayburn, a Texas Democrat, who died in office in 1961. Over those 20 years, she oversaw passage of some of the most significant legislative accomplishments of the last half-century; raised more than US$1.2 billion for the party; and shattered the glass ceiling in 2007, when she became the first woman ever to ascend to the House Speakership — a feat she repeated in 2019.

“She’s a tough, effective, focused, disciplined woman. I wasn’t always on the same side as her — and it’s not pleasant being on the other side of her — but she knew how to bring a disparate group of people together to get the job done,” Rep. Debbie Dingell, a close Pelosi ally, said Thursday morning as Democrats waited anxiously for the Speaker’s announcement. 

Pelosi helped steer the congressional response to the Great Recession; guided the passage of ObamaCare; secured trillions of dollars in emergency relief through the COVID-19 pandemic; and made the decision to impeach former President Trump, not once but twice. 

Pelosi also launched the special investigation into the Jan. 6, 2021, attack on the Capitol, the results of which could reverberate through the legal and political world for many years to come.

“I’m not a House historian, but what I hear from House historians is that she is probably the strongest Speaker of the House we have seen in many, many, many years,” said Rep. Rosa DeLauro, another close Pelosi ally.

“It values, her strategic ability, her knowledge of the system, how to negotiate — all of those really melded into one person, which have forged an unbelievable legislative legacy,” she continued. “And that’s wherein lies her strength . … Someone who knows how to get from A to B, with a very diverse caucus.” 

Part of that legacy will be this year’s midterm elections. Heading into the polls last week, Republicans were expecting a rout, one that would lend them a considerable majority to do battle with President Biden through the last two years of his first term. Instead, Democrats were able to cling to dozens of toss-up seats in battleground districts, limiting the Republican gains and making it harder for GOP leaders to govern next year. 

“This really solidifies her legacy as the most accomplished Speaker in U.S. history, by all measures — all measures,” Ashley Etienne, Pelosi’s former communications director, said of Pelosi’s role in the Democrats’ midterm performance. “There’s no question.”

Pelosi’s decision will clear the bottleneck that’s existed at the very top of the Democratic Caucus since 2003, when she and her top deputy, Steny Hoyer, assumed the leading spots. James Clyburn would join them in 2006 in the No. 3 slot, where he has remained ever since. 

Neither Hoyer nor Clyburn have ruled out bids to remain in power in the next Congress. But a younger group of up-and-coming Democrats is eager to climb the leadership ladder, or just get into the ranks.

Three current members of leadership — Hakeem Jeffries, Katherine Clark and Pete Aguilar — are expected to launch bids for higher spots at the first opportunity.

Jeffries, a member of the Congressional Black Caucus, is widely viewed as the favorite to replace Pelosi and Joyce Beatty, who heads the Black Caucus, predicted Thursday that every member of that group would back Jeffries.  

But Hoyer, after almost 20 years right behind Pelosi, has raised tens of millions of dollars for the party over the years, building his own loyal following along the way.

 

Iran hit tanker, says Israel

Iran attacked an oil tanker connected to an Israeli businessman in an attempt to distract from a failed assassination plot against an Israeli businessman in Georgia, Israeli officials said on Wednesday.

The oil tanker, the Pacific Zircon, is a Liberian-flagged ship operated by Singapore-based Eastern Pacific Shipping, which is owned by Israeli billionaire Idan Ofer. The tanker itself is owned by Japanese firm Taihei Kaiun Company, according to Lloyd’s List Intelligence. A statement by Eastern Pacific confirmed that the vessel, sailing in the Gulf of Oman, had been hit by a projectile, lightly damaging the hull. No injuries were reported in the attack.

Israeli officials said the Israeli connection to the tanker was very limited. They added that the same type of Iranian drone being used by Russia in Ukraine, the Shahed 136, executed the attack.

“This is another event that proves that Iran acts as a global exporter of terrorism. This is another time that Iran is harming global freedom of navigation,” said the officials. “Iran undermines security in the Gulf and, along the way, undermines stability during the World Cup,” which starts on Sunday in Qatar.

Iranian Nour News, affiliated with Iran’s Supreme National Security Council, accused Israel and its Gulf allies of targeting the tanker in an attempt to transfer difficulties surrounding forming a government in Israel and to raise tensions and distract Iran and Qatar with marginal events.

The US Navy’s Fifth Fleet was aware of the incident, Commander Timothy Hawkins said, and National Security Advisor Jake Sullivan condemned the attack, saying Iran likely conducted the attack using a UAV.

“There is no justification for this attack, which is the latest in a pattern of such actions and broader destabilizing activities. This action further threatens freedom of navigation through this crucial waterway, international shipping and commerce, and the lives of those on the vessels involved,” said Sullivan.

US Central Command confirmed that an Iranian Shahed-series drone hit the vessel. “This unmanned aerial vehicle attack against a civilian vessel in this critical maritime strait demonstrates, once again, the destabilizing nature of Iranian malign activity in the region,” said US Central Command (CENTCOM) commander General Michael Erik Kurilla.

The United Kingdom Maritime Trade Operations said an investigation was ongoing.

“UKMTO are aware of reports of an incident in the Gulf of Oman/Arabian Sea... Vessel and crew are safe,” it said on its website.

According to ship tracking site MarineTraffic, Pacific Zircon was last seen off the coast of Liwa, Oman, on Monday morning. It departed from Sohar, Oman, on Monday afternoon with its destination set as the Port of Buenos Aires.

The ship last reported signaling its position near the Gulf of Oman on Tuesday, according to Bloomberg.

The reported Iranian attack came as three Iranian vessels were headed for the coast of Syria.

On Wednesday morning, the Iranian Azargoun container ship arrived at the Port of Latakia on the coast of Syria, according to vessel tracker MarineTraffic. The vessel is subject to US sanctions.

The Iranian Arman114 and the Lotus oil tankers were also reportedly headed towards the Syrian coast in recent days, with satellite imagery showing the two departing the Suez Canal into the Mediterranean.

Last year, Iran and Israel blamed each other for a string of attacks targeting each other’s vessels. Iran has long sought to target ships it thinks are linked to Israel.

In February 2021, the MV Helios Ray was hit by an alleged Iranian attack in the Gulf of Oman.

In March 2021, an Iranian ship, the Shahre Kord, was damaged by an explosion, with Iran blaming Israel for the incident. Shortly before the attack, The Wall Street Journal reported that Israel had attacked about a dozen Iranian ships carrying oil to Syria. Additionally in March 2021, an Iranian missile was fired at an Israeli-owned ship in the Arabian Sea, hitting and damaging it.

In April 2021, Israel was blamed for attacking the Iranian Saviz ship in the Red Sea. The Saviz was reportedly used by the IRGC as a forward base.

In July 2021, two crew members were killed when Iran struck the Mercer Street oil tanker in the Gulf of Oman. While the vessel is owned by a Japanese company, it was operated by the London-based Zodiac Maritime, part of Israeli billionaire Eyal Ofer’s Zodiac Group.

Less than a week after that attack, Iranian forces reportedly attempted to hijack the Asphalt Princess tanker off the coast of the UAE, but fled the ship after workers sabotaged the engines, according to The Times.