Gold jewellery exports from India routed through West Asia are being adversely affected because of two reasons: First, because of the 10 per cent import duty levied on imported gold used in making jewellery, and, second, by the 5 per cent import duty on jewellery levied by the United Arab Emirates (UAE) effective January 1.
Gold jewellery exports dropped more than 24 per cent in January and 47.52 per cent in February. India has been losing exports rapidly to competitors including China.
Experts say there has been an increase in the number of manufacturing units set up in the UAE because of this phenomenon. These manufacturing bases are dominated largely by Indians who own similar units in India. As a result, people who work on gold are migrating to the UAE, which accounts for nearly 20 per cent of India’s jewellery exports.
“Dubai is no longer a free trade centre. The immediate need of the hour is to reduce the import duty on gold. An import duty on gold beyond 5 per cent is counterproductive. Hence, the government should cut the import duty on gold to below 5 per cent to arrest the fall in gold jewellery exports,” said Praveen Shankar Pandya, chairman, Gems and Jewellery Export Promotion Council (GJEPC), the premier jewellery export promotion body under the ministry of commerce.
Airline passengers traveling from eight Middle Eastern nations, including Jordan and Egypt, will be barred from carrying large electronic devices into the main cabin under new regulations from the Trump administration.
The new rules, which come into effect on Tuesday, also apply to Saudi Arabia and the United Arab Emirates, according to a US official. Passengers from the eight countries will have to check laptop computers and other large devices, such as tablets, into the hold on all flights bound for airports in the US. But the restrictions will not apply to flights leaving the US for the same countries, according to the official, who requested anonymity.
The move marks the latest attempt by the Trump administration to tighten security after Mr Trump vowed during the presidential race to do more to tackle terrorism. It comes one week after his administration issued a revised travel ban that temporarily bars citizens of seven largely Muslim countries from entering the US. The revised order, like the first one, has been blocked by the courts, preventing implementation for the time being.
Royal Jordanian Airlines earlier on Monday warned its passengers about the new Department of Homeland Security regulations regarding large electronic devises. But the airline later removed a notice from its social media accounts, following suggestions that it had prematurely released information. While some outlets have reported that the ban applied to 13 countries, the US official said only eight nations were on the actual list.
With little active US presence in the region (see latest naval map below), on Sunday Iran launched a massive naval drill at the mouth of the Gulf and the Indian Ocean. Ships, submarines and helicopters will take part in the drills across an area of about 2 million square kilometers (772,000 square miles) and marines will showcase their skills along Iran’s southeastern coast, the state news agency IRNA said even as tensions with the United States continue to build after U.S President Donald Trump put Tehran “on notice”.
Iran’s annual exercises will be held in the Strait of Hormuz, the Gulf of Oman, the Bab el-Mandab and northern parts of the Indian Ocean, to train in the fight against terrorism and piracy, Rear Admiral Habibollah Sayyari said, quoted by Reuters. Today’s drill marks the last phase of war games that started in 2016, Iran’s Tasnim news agency reported. The exercise, codenamed ‘Velayat 95’, kicked off in Iran’s south following an order from Iranian Navy Commander Rear Admiral Habibollah Sayyari.
Apart from the main drills, Iran’s Navy commando units are conducting special operations in the southeastern Makran region. Last June, Sayyari said that Tehran was planning to carry out 20 military drills before March 2017. Iranian officials insist that the war games do not violate the Joint Comprehensive Plan of Action (JCPOA) – the nuclear deal between Iran and the Group 5+1 signed in January of 2016.
The UN nuclear watchdog said on Saturday that Iran has been found to be in full compliance with the nuclear deal, but the report comes against a backdrop of rising tensions between Tehran and Washington.
Earlier this month, then-US National Security Advisor Michael Flynn said that “Iran had been put formally on notice” after Tehran fired a ballistic missile. Later in February, President Trump tweeted that “Iran is playing with fire,” promising that he won’t be as “kind as [former President] Obama” and warned the Islamic Republic after its ballistic missile test on Jan. 29 that it was playing with fire and all U.S. options were on the table.
In response, Iran’s foreign minister, Mohammad Javad Zarif, blasted the US, saying Tehran remains “unmoved” by threats, but will use weapons “only in self-defense.” Last month, a US Navy destroyer fired warning shots at four Iranian military ships that were allegedly approaching them at high speed near the Strait of Hormuz.
The latest US naval deployment shows that while the South China Sea has been a recent focus of the US navy, the only US ship in the region is the LHD 8 Makin Island Amphibious Ready Group, although the George H.W. Bush aircraft carrier is currently headed for the region.
Wednesday served as another opportunity for Iran to flex its missile arsenal. The Iranian military used the same Semnan launch pad to fire the missile as it used in January, Fox News World reported.
The Iranian military tested a short-range Mersad surface-to-air missile, according to the news outlet.
The missile landed 35 miles away from where it started, a US official told Fox.
Just days ago, President Donald Trump slapped a slew of new sanctions on entities thought to support Iran’s ballistic missile program. Iran retaliated with its own set of sanctions, adding that Trump’s sanctions “are not compatible with America’s commitments and Resolution 2231 of the UN Security Council that endorsed the nuclear deal reached between Iran and six powers.”
Satellite images previously showed that Iran was going to use the pad to send a satellite into space atop a Safir rocket, but the send-off apparently was scrapped. “The reason Iran scrubbed the previous launch is not yet known,” ZeroHedge reported.
Critics have pointed out that the Mersad air defense system fires surface-to-air missiles that are essentially reverse-engineered Raytheon MIM-23 Hawk missiles.
US oil production has turned a corner after a long period of weak petroleum prices, the government said, with volumes rising for the first time since early 2015.
The Energy Information Administration forecast that oil output from the US will increase 1.3 per cent to 9m barrels per day in 2017, abandoning an earlier prediction of a 0.9 per cent fall.
In the first forecast for 2018 in its monthly Short-Term Energy Outlook, the statistical agency said US crude production will rise another 3.3 per cent, or 300,000 b/d, to 9.3m b/d. Production hit bottom last September, EIA said.
“The general decline in US crude oil production that began almost two years ago is likely over, as higher average oil prices and improvements in drilling efficiency are giving a boost to output,” said Adam Sieminski, the EIA’s administrator.
Ten days ago, we reported that as a result of Obama’s vow to extend the Iran Sanctions Act for another 10 years, Iran threatened to retaliate, saying it violated last year’s deal with six major powers that curbed its nuclear program.
While US officials said the ISA’s renewal would not infringe on Obama’s landmark nuclear agreement (which may or may not be voided by Trump), and under which Iran agreed to limit its sensitive atomic activity in return for the lifting of international financial sanctions that harmed its oil-based economy, senior Iranian officials took odds with that view. Iran’s nuclear energy chief, Ali Akbar Salehi, who played a central role in reaching the nuclear deal, described the extension as a “clear violation” if implemented.
“We are closely monitoring developments,” state TV quoted Salehi as saying. “If they implement the ISA, Iran will take action accordingly.” Iran’s most powerful authority, the Supreme Leader Ayatollah Ali Khamenei, warned in November that an extension of U.S. sanction would be viewed in Tehran as a violation of the nuclear accord.
To be sure, that was merely jawboning by Iran, which has far less leverage and far more to lose if it antagonizes Washington and provokes the US into reimposing sanctions upon the Gulf nation, amounting to the tune of over 1 million barrels per day in foregone oil exports that would be taken offline, should the US impose similar sanctions as those which took the country’s crude export production largely offline in the 2013-2015 timeframe.
It is also the lesser of Iran’s worries: a far bigger concern is whether Trump will tear up Obama’s landmark nuclear agreement.
The global oil market has witnessed a serious challenge of imbalance and volatility pressured mainly from the supply side. It has led to significant investment cuts in the oil industry, which has a direct impact on offsetting the natural depletion of reservoirs and in ensuring security of supply to producers.
Current market conditions are counterproductive and damaging to both producers and consumers, it is neither sustainable nor conducive in the medium- to long-term. It threatens the economies of producing nations, hinders critical industry investments, jeopardizes energy security to meet growing world energy demand, and challenges oil market stability as a whole.
There is a firm and common ground that continuous collaborative efforts among producers, both within and outside OPEC, would complement the market in restoring a global oil demand and supply balance, in particular the drawdown in the stocks overhang, which is currently at a very high level.
At this conjuncture, it is foremost to reaffirm OPEC’s continued commitment to stable markets, mutual interests of producing nations, the efficient, economic and secure supply to consumers, and a fair return on invested capital.
Consequently, the recovery of oil market balance could be addressed through dialogue and cooperation among producing countries as a way forward for cohesive, credible, and effective action and implementation. Hence, it is under the principles of good faith that countries participating in today’s meeting agree to commit themselves to the following actions:
While the market has taken the latest round of “optimistic” jawboning by OPEC members in stride, sending crude higher by 4% ahead of next week’s OPEC meeting in Vienna where the terms of the OPEC production cut are expected to be finalized, the reality is that a favorable outcome may be problematic.
As Bloomberg’s Julian Lee explained overnight, “OPEC says it’s close to a deal to cut oil output for the first time since 2008, a move that may halt a 2 1/2-year price slump. The actions of individual member states tell a different story. The simple math supporting cuts looked solid at OPEC’s meetings in June and December. Prices then were way below most members’ fiscal break-even points. An output cut now of 1.5 million barrels a day, or 5 percent, would need to boost the oil price by only $2.50 a barrel for OPEC nations collectively to be better off. A $5 price increase would boost the value of what they pump by about $100 million a day.”
There are various nuances as to why a deal, one in which Saudi Arabia would bear the brunt of total production cuts, but as Lee notes, while OPEC Secretary-General Mohammed Barkindo has been touring member nations to shore up support for an agreement before the Nov. 30 meeting, culminating with a trip to Doha for talks last week, “the meeting didn’t resolve much. It certainly didn’t tackle any of the thorniest questions that OPEC must still overcome if coordinated measures are to happen.”
“The road from the OPEC agreement in Algiers to the next official OPEC meeting in Vienna is long and bumpy,” said Harry Tchilinguirian, head of commodities strategy at BNP Paribas SA in London.
The report stressed that oil prices were volatile and highly dependent on a variety of factors, including Brexit contributing to the general uncertainty and risk aversion or economic slowdown in Russia and China.
“Oil prices are assumed to average $43 a barrel in 2016 and $51 a barrel in 2017. Over the medium term, any further oil price recovery is expected to be limited, with futures markets suggesting prices will remain below $60 by 2021,” the report detailing the oil market forecast and its influence on the Middle East, North Africa, Afghanistan, and Pakistan said. In a recent effort to revitalize oil demand, Organization of the Petroleum Exporting Countries (OPEC) members reached an agreement on oil production freeze scheduled for finalization at OPEC summit on November 30, with non-OPEC states, including Russia, open to also capping the output.
India has imported the first parcel of Iranian oil to partly fill the underground strategic oil storage it has built at Mangalore.
“Mangalore Refinery and Petrochemicals Ltd (MRPL) received the first parcel of crude oil for delivery into the Mangalore cavern of Indian Strategic Petroleum Reserves Ltd (ISPRL),” the company said in a statement.
The first parcel of 260,000 tonnes of Iran Mix crude was received in very large crude carrier (VLCC), MT DINO.
The crude is being pumped into the underground Mangalore cavern for testing the facilities, it said. To ensure energy security, India has built 5.33 million tonnes of strategic crude oil storages at Vishakhapatnam, Mangalore and Padur (Near Udupi) in Karnataka.“These strategic storages would serve as a cushion during any external supply disruptions,” the statement said. “The strategic crude oil storage facilities are being managed by ISPRL, a special purpose vehicle,” it said.
Vishakhapatnam facility with a capacity to store 1.33 million tons was commissioned in June last year. “Mangalore facility with capacity of 1.5 million tonnes has started receiving crude today for testing the facility,” the statement said, adding the Padur facility is expected to be ready soon.