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Tue, 17th January 2017

Anirudh Sethi Report

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Archives of “middle east” Tag

IAEA Chief Says Iran Remains Committed to Nuclear Deal

Iran's President Hassan Rouhani, right, welcomes the International Atomic Energy Agency's director-general, Yukiya Amano, as they pose for photos at the start of their meeting in Tehran, Iran, Thursday, July 2, 2015The head of the International Atomic Energy Agency (IAEA) said Iran has shown commitment to its end of the nuclear deal struck last year while visiting Tehran December 18.

Iran has complained about the US extending a sanctions package for another decade. The US says these sanctions are unrelated to the deal; Iran disagrees.

“We are satisfied with the implementation of the [nuclear agreement] and hope that this process will continue,” IAEA Director General Yukiya Amano told the press in the Iranian capital, Reuters reports, citing the IRNA news agency.

“Iran has been committed to its engagement so far and this is important,” he said. Amano was in Tehran to meet head of Iran’s Atomic Energy Organization Ali Akbar Salehi. After the White House said earlier this week that the sanctions bill would become law even without President Barack Obama’s signature, Iran requested a meeting of the Joint Comprehensive Plan of Action (JCPOA) commission to discuss the situation and ordered its scientists to start developing nuclear systems to power ships.  Salehi presented the maritime nuclear propulsion project to Amano and said the country would provide more details on it in three months, according to the Islamic Republic News Agency (IRNA). The initial outline did include what is so far the most controversial issue of the project: the level of uranium-enrichment powering the ships will require.

Iran Warns Of “World War, The Destruction Of Israel”, If Trump Tears Up Nuclear Pact

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.

MidEast Massacre As Saudi Bank Stocks Crash To Crisis Lows

It’s probably nothing but… Saudi banking stocks have been halved in the last year and crashed to their lowest level since the March 2009 lows. Middle East stock markets began the week with a big downturn as China comes back from its Golden Week holiday…

Just when you thought it was safe to buy the f##king dip…

Overnight US Market :Dow closed -12 points.

Stocks closed mixed to modestly lower Thursday as traders await Friday’s key jobs report and digest oil’s climb back above $50 per barrel and a continued drop in the British pound on Brexit fears.

The Dow Jones industrial average fell 12.53 points, or 0.1%,to 18,268.50, according to preliminary calculations. At one point the blue-chip index was down as much as 118 points. The Standard & Poor’s 500 stock index was up 1.04, or 0.05%, to 2160.77 and the Nasdaq composite fell 9.17, or 0.2%, to 5306.85.

Stocks rallied Wednesday, ending a two-day losing skid, enabling the Nasdaq to climb within 0.4% of a fresh record high and putting the Dow and S&P 500 within 2% of their August peaks.

Wall Street is in a holding pattern ahead of the release of the September jobs report  Friday. Analysts are forecasting job gains of 170,000 to 175,000, following the creation of just 151,000 new jobs in August. A strong jobs report could give the Federal Reserve more reason to hike interest rates later this year for the first time in 2016. Low rates and borrowing costs have been a key driver of stock gains in the current bulll market, now well into its seventh year.

Rising long-term bond yields in the U.S. may also be weighing on stocks. The yield on the 10-year Treasury note jumped to 1.739%. Rates appear to be heading higher as odds of a late-year Fed rate hike remain firm.

‘A false dawn’, ‘not as good as it sounds’ – analysts react to Opec deal

A deal is better than no deal, but just how good is Opec’s first agreement to limit production since the financial crisis?

To recap: In Algiers on Wednesday, the world’s major producer nations agreed on their first co-ordinated effort to control supply since 2008 and sent oil prices duly soaring by 6 per cent.

Details, including country-specific targets, will be released on November 30 but analysts and Opec-watchers have already raised concerns about how the burden to cut production will be spread and the prospect of backsliding among Opec’s members.

Here’s a round-up of what they make of it all.

The Algiers meeting is something of a “false dawn” says Hamza Khan, head of commodities strategy at ING who says the cut is still a shadow of the 1.5m b/d cut agreed in 2008. It will also pose problems for some Opec’s dissenters – including Iran, Nigeria and Libya, he added:

Saudi Arabia could have shouldered the bulk of cuts, likely reducing output of heavier blends from the Wafra oil field.

But the kingdom’s new crown prince and oil minister have been vocal about the prospects of a Saudi Aramco IPO in 2017/18, and such discretionary cuts would hurt investor confidence in such a listing.

Russia at the moment does not appear to be part of the agreement and continues to pump at record levels.

Analysts at Morgan Stanley have also doused a good deal of cold water on the deal, claiming the intervention is “not as good as it sounds” with execution still posing a major problem.

Overnight US Market :Dow Closed +110 points.S&P 500 Up 11 points

Stocks ended the day higher amid reports that OPEC, the Middle East oil cartel, has agreed to cut production amid an ongoing global glut of crude.

The Dow Jones industrial average, which had been in the red earlier in the afternoon, ended up 110 points, or 0.6%. The broader Standard & Poor’s 500 stock index climbed 0.5% and the Nasdaq composite gained 0.2%.

A big rally in crude sparked the broader market rally. U.S.-produced crude was up $2.17 per barrel, or nearly 5%, to $46.87.

Oil prices jumped Wednesday after reports that the Organization of the Petroleum Exporting Countries (OPEC) had agreed to slash production at a conference in Algiers. If it sticks — and that’s a big if — an accord could help ease the global glut of oil that has washed over the world in the last two years. OPEC member countries agreed to slash production by about 740,000 barrels per day to 32.5 million, Reuters reported Wednesday, citing anonymous sources.

The OPEC news pushed oil stocks sharply higher. The broad Vanguard Energy ETF (VDE) was up 4.3%. Exxon-Mobil (XOM) was 3.8% higher and oil services firm Halliburton was up 3.9%.

Wall Street was also digesting fresh economic news. U.S. durable goods orders in August came in flat, but better than the 1.5% drop economists’ forecast. Still, the report of weak orders for long-lasting, expensive items such as refrigerators was viewed as a sign of economic weakness.

Saudi’s Tadawul sink to 7-month low amid fresh wave of austerity

The headaches mount for Saudi Arabia.

The kingdom’s stock exchange has fallen to its lowest level since February today as investors took a dim view of the central bank’s latest move to support its banks and news of a fresh round of austerity in the public sector.

Saudi’s Tadawul bourse is down 3.5 per cent today – dropping to its lowest level since global markets went into a tailspin back in February.

The drop comes after the Saudi Monetary Authority (SAMA) unveiled plans to inject 20bn riyals ($5.3 billion) into its banking system – a decision which analysts at Bank of America Merrill Lynch think will help reduce the strain on domestic banks, which have been reeling from the effects of low global oil prices.

Earlier this week, the kingdom announced it would be taking the axe to public sector bonuses and benefits for the first time since oil prices slumped in the summer of 2014.

The royal decrees are the latest in a series of measures taken to reduce fiscal largesse in a country where the state employs around two-thirds of all working nationals.

Tuesday’s equity sell-off also comes as the country’s oil chiefs struggle to broker a production cut at a meeting of the world’s major producers in Algiers.

Iran takes hard line on oil talks, targets market share

Iran is taking a hard line as talks between big oil producers are set to get under way in Algiers.

Rather than targeting an outright level of production, Iran wants to regain lost market share before it joins any agreement to limit supplies, according to Iranian oil sources.

Tehran wants around 13 per cent share of any new Opec output ceiling. Based on the cartel’s current production that would translate to around 4.2m barrels a day – around 400,000 b/d more than Iran currently claims to be pumping.

Such a demand will be difficult for Saudi Arabia to accept. The Opec kingpin wants Iran to cap its oil output at 3.6m barrels a day, the level analysts say it produced in August, in exchange for other big producers cutting their production.

Opec members and other big oil producers are meeting on the sidelines of the International Energy Forum in Algeria. An informal meeting of Opec ministers is scheduled to take place on Wednesday.

Hopes of a deal are fading, although there could still be a surprise.

Iran’s Central Bank Allows Issue of Credit Cards for First Time

According to ISNA, the cards will be issued with the credit limits of $3,000, $10,000 and $15,000. It will be possible to use them both for purchases in stores and online.

“It would be wrong to think that these cards will be quickly adopted by the banking network,” the agency quoted Seif as saying.

The credit cards are set to be issued in the number depending on applications received by the banks.

The Central Bank’s decision comes after in January, the European Union, the United Nations, and partially the United States lifted their sanctions against the Islamic republic after the International Atomic Energy Agency verified Tehran’s compliance with a nuclear agreement reached in July 2015. The lifting of the sanctions cleared the way for Iran to bolster its oil production and economy.

Saudis Offer To Cut Production By 500,000 Barrels: “The Oil Market Situation Is Much More Critical”

Saudi Arabia’s oil policy, unveiled just under two years ago, at the November 2014 OPEC meeting where it effectively splintered the OPEC cartel by announcing it would produce excess quantities of oil in hope of putting shale and other high-cost producers out of business has backfired spectacularly: not only has OPEC failed to crush the US shale industry, which as a result of increasing efficiencies, and debt-for-equity exchanges has seen its all in production costs tumble, making even far cheaper oil prices profitable (especially with the addition of hedges), not to mention Wall Street’s ravenous desire to buy any debt paper that offers even a modest yield allowing US oil producers to delay or outright avoid bankruptcy.

But while shale has avoided annihilation, it is Saudi Arabia that has been suffering. In “Kingdom Comedown: Falling Oil Prices Shock Saudi Middle Class“, the WSJ reports that “a sharp drop in the price of oil, Saudi Arabia’s main revenue source, has forced the government to withdraw some benefits this year—raising the cost of living in the kingdom and hurting its middle class, a part of society long insulated from such problems.”

 The kingdom is grappling with major job losses among its construction workers—many from poorer countries—as some previously state-backed construction companies suffer from drying up government funding. Those spending cuts are now hitting the Saudi working middle class.

Saudi consumers in major cities, the majority of them employed by the government, have become more conscious about their spending in recent months, said Areej al-Aqel from Sown Advisory, which provides financial-planning services for middle-class individuals and families. That means cutting back on a popular activity for most middle-class Saudis: dining out.

“Most people are ordering less food or they change their orders to more affordable options,” she said.