United States exerting more influence on global oil market than other producers

Igor Sechin, Head of Russian energy major Rosneft has said that Russia is losing out to other OPEC Plus countries due to a smaller share of its oil production being exported.

Sechin, a longstanding ally of President Vladimir Putin, also said that the oil output boom in the United States, which is not a member of the OPEC Plus, was wielding more influence on the global oil market than other producers.

Some experts and analysts have noted that Russia's oil exports are still relatively high despite cuts in production.

Speaking at an economic forum, Sechin said some OPEC Plus countries were exporting as much as 90% of their output, whereas Russia supplies the global market with only half of its production.

"That puts our country in a less advantageous position under the current mechanism for assessing the impact and access to key markets," he said. "In this regard, it seems appropriate to monitor not only production quotas, but also oil export volumes, given the different sizes of domestic markets."

Currently, the Organization of the Petroleum Exporting Countries and allies including Russia, a group known as OPEC Plus, regulates only production, not exports.

Amid flagging oil prices, OPEC Plus agreed on a new oil output deal earlier this month, while Saudi Arabia, the group's biggest producer, pledged to make a deep cut to its output in July on top of a broader OPEC Plus deal to limit supply in 2024.

OPEC Plus accounts for around 40% of global oil production, while Rosneft takes the same share of Russia's oil output.

In remarks published later on Rosneft's website from Sechin's speech, he said Saudi Arabia is voluntarily cutting oil production, while also increasing production capacity.

He said Saudi Arabia may increase the amount of drilling rigs by at least a quarter in the next two years. As a result, by 2025-27, Saudi Arabia's oil producing capacity may rise by around 2 million barrels per day.

Speaking at the forum, Sechin also said it was more difficult for OPEC countries to find common ground due to differences in economic structure and oil production.

"In coming years, humanity will face the problem of production capacities and OPEC countries will no longer be able to meet the growing demand," he said.

 

Saudi Arabia urges G-20 members to strengthen food systems

The G-20 Agriculture Ministers’ Meeting took place in Hyderabad, India. The Saudi delegation was headed by Minister of Environment, Water and Agriculture Eng. Abdulrahman Bin Abdulmohsen Al-Fadhli.

Eng. Al-Fadhli said we urge for cooperation to strengthen food systems for a better and more sustainable future.

Eng. Al-Fadhli also added that in the aftermath of COVID-19, the food and agriculture production systems worldwide continue to face numerous challenges, particularly at a time, when the demand for food for a growing population, is increasing rapidly.

“One crucial element in ensuring food security is strengthening rural communities by educating and empowering women and youth.

“Saudi Arabia in 2018, launched its flagship Sustainable Rural Development Program covering eight different areas.

“The program has proven remarkably to increase the income of our beekeepers by up to 50%, while a 10% increase in rain-fed small farmers,” Eng. Al-Fadhli added.

Eng. Al-Fadhli mentioned to the importance of responsible investment in agriculture and food Systems. Furthermore, it is required to align financing with innovation policies. By adopting these innovations, we can enhance the efficiency, resilience, and sustainability of our food sector.

Over the past five years, Saudi Arabia has increased loans for the adoption of innovative technologies by more than 10 folds.

“We think that digitalization is emerging as a key catalyst to transform the agriculture sector by improving resource efficiency, enhancing performance, and boosting productivity.

“In this regard, Saudi Arabia launched a digital extension platform, which served more than 230,000 farmers and provided 2.9 million agricultural extension services,” Eng. Al-Fadhli added.

Eng. Al-Fadhli stressed there is a need for realignment of all humanitarian programs to effectively address the most pressing food insecurity challenges.

In this regard, Saudi Arabia has demonstrated its commitment, by completing over 772 food security projects in 71 countries through King Salman Humanitarian Aid & Relief Centre.

Eng. Al-Fadhli called for work together as G20 Agriculture Ministers within the framework of SDGs for realizing the Opportunities of the 21st Century for All, for our One Future.

Pakistan Stock Exchange Index posts 1.4%%WoW decline

Pakistan Stock Exchange posted lackluster performance during the week ended on June 16, 2023, with KSE-100 index losing 603 points during the week to close at 41,301 points, posting a decline of 1.4%%WoW. 

Market participation also registered a decline of 25%WoW, averaging at 161.7 million shares as compared to an average of 215.7 million shares a week ago. Despite the negative impact of the budget, including the imposition of a 10% super tax, windfall tax, and tax on bonus share, the market showed some resilience.

Meanwhile, in the last Monetary Policy Committee (MPC) meeting on Monday, State Bank of Pakistan maintained the policy rate at 21%.

As per news flow, GoP has paid US$1.0 billion as debt repayment during the week. The SBP in its post MPS briefing apprised that only US$800 million of repayment was due for the remaining month. The decline in reserves resulting from this repayment is expected to be visible in the foreign exchange numbers to be released next week. As of June 9th, foreign exchange reserves held by SBP were reported at US$4.02 billion, which are anticipated to drop below the US$3 billion mark due to the rumored debt repayment.

On the currency front, PKR lost 0.09%WoW to close at PKR287.2/US$.

Other major news flows during the week included: 1) LSM took a nosedive of 21.07% in April, 2) US$7 billion Chinese and Saudi deposits and PKR402 billion paid as cost of rollovers, 3) July-May remittances plunged 13% to US$24.83 billion, 4) Car sales took a nosedive of 80% in May, 5) Tax expenditures constitute 36.43% of FBR tax collection, 6) IMF came down hard on Pakistan’s budget proposals.

Sector-wise, Leasing Companies, Chemical, and Textile Weaving were amongst the top performers, while Transport, Modarabas, and Textile Spinning were amongst the worst performers.

Flow wise, major net selling was recorded by Mutual funds with a net sell of US$1.97 million. Individuals absorbed most of the selling with a net buy of US$4.40 million.

Top performing scrips during the week were: PGLC, SHEL, COLG, MTL, and BNWM, while top laggards included SML, KEL, HINOON, PSMC, and FABL.

Market is expected to remain range bound in the short term, primarily due to the lack of clarity on the IMF front as the current IMF program is nearing expiration with less than half a month remaining.

Additionally, political instability will also contribute to investors’ uneasiness and impact the market confidence. It is advisable for investors to remain cautious while building positions until stability improves.

Analysts continue to advocate stocks with dollar denominated revenue streams i.e. E&P and Technology sector. Additionally, considering companies with healthy forward dividend yields can be a strategy to explore.

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.