Archives for February 2016

The deal could be reached if other producers join the initiative according Russian and Saudi energy ministers. OPEC members Qatar, Venezuela and Kuwait have already said they were ready to freeze output at January levels.

Another OPEC member Iraq says it’s ready to freeze or even cut output if other producers commit to the accord, an unnamed Iraqi official told Bloomberg.

The preliminary deal to fix output at January levels is the beginning of a process that may require “other steps to stabilize and improve the market,” according to Saudi Oil Minister Ali Al-Naimi.

The focus now shifts to Iran which seems rather reluctant about the output cap. Iran’s OPEC envoy Mehdi Asali was quoted by the Iranian newspaper Shargh as saying that it is “illogical” for the country to join the oil output freeze as it only just restarted oil exports after sanctions have been lifted.

“Our situation is totally different to those countries that have been producing at high levels for the past few years,” a senior source familiar with Iran’s thinking told Reuters.

Iran’s Oil Minister Bijan Namdar Zanganeh earlier said Tehran “will not forgo its share of the market,” will meet his counterparts from Iraq and Venezuela in Tehran on Wednesday.

Last month Iran pumped 2.86 million barrels of oil per day. The Islamic Republic was producing 3.8 million barrels a day before international sanctions were imposed on exports. Tehran says it plans to increase daily exports by one million barrels this year. On Sunday the country shipped its crude oil to Europe for the first time in five years.

READ MORE: OPEC overproduction ‘politically motivated’ – Iran’s Oil Minister

If successful, the agreement to freeze production could become the first global oil deal in fifteen years. The last major pact occurred in 1999 when OPEC countries negotiated in secret to curb output. The decision helped trigger a decade-long bull market, lifting crude from $10 a barrel to more than $140. Analysts have already called the preliminary deal to freeze production a “grand bargain”.

Article source: https://www.rt.com/business/332723-iran-oil-deal-participation/?utm_source=rss&utm_medium=rss&utm_campaign=RSS

A hundred law enforcement agents including a special tactics group and an armored personnel carrier were involved in the raids.

Putin says no more handouts for Russian offshore companies

Since the 1990’s, vodka production has been one of the most dangerous businesses in Russia and has long been suspected of connections to organized crime.

According to the newspaper’s federal sources, the FSB acted on behalf of Russian President Vladimir Putin.

The company in question, Status Group, controls 18.4 percent of the Russian vodka market by volume terms and 15.1 percent in monetary. The company sells mostly cheap vodka brands – at 185 rubles ($2.5) per 0.5 liter – the minimum price allowed by Russian law.

The 11 Caucasian liquor producers are in the Kabardino-Balkarian Republic. They allegedly used a scheme to avoid paying about 23 billion rubles (about $300 million) in taxes in this region alone.

However, at the moment there are no tax claims against Status Group. The company was buying vodka from local wholesalers that got the alcohol from the liquor producers.

While the company in question produces legal vodka with a legally obtained license, damages from illegal alcohol are much higher; Vedomosti quotes a source in the Finance Ministry. According to the publication’s sources, the issue is under personal control of President Putin, and this and other illegal schemes will be shut down.

The owners of Status Group have not been disclosed. According to business media RBC, the company is owned by Vasily Anisimov, a former co-owner of Metalloinvest.

He is thought to have a $2 billion net worth. A spokesman for Anisimov claims he is not a shareholder in Status Group and has nothing to do with the company.

Article source: https://www.rt.com/business/332721-vodka-russia-putin-war/?utm_source=rss&utm_medium=rss&utm_campaign=RSS

China and Iran relations enter ‘new chapter,’ strategic ties to be expanded

It took just 14 days for the 32-container train loaded with Chinese goods to complete the 5,900 mile (9,500km) journey from China’s eastern Zhejiang province through Kazakhstan and Turkmenistan.

It’s 30 days shorter than the sea voyage from Shanghai to the Iranian port of Bandar Abbas, according to the head of the Iranian railway company, Mohsen Pourseyed Aqayi.

“The arrival of this train in less than 14 days is unprecedented,” he said, adding that the revival of the Silk Road is crucial for the countries on its route.

Aqayi says there will be a train every month and more frequently if necessary.

The railway will not stop in Tehran, Aqayi said as they are “planning to extend the railway to Europe in the future” with transits generating more income for Iran.

China is Iran’s biggest trading partner, accounting for most of Tehran’s oil exports. Trade between the two countries stood at around $52 billion in 2014. Last month Chinese President Xi Jinping and his Iranian counterpart agreed to increase trade turnover to $600 billion within the next 10 years.

In 2014, Beijing announced an ambitious foreign policy initiative known as ‘One Belt One Road’. The project also known as the New Silk Road includes plans to build roads, ports, railway systems and other infrastructure from China to the Middle East, as well as Central, South and Southeast Asia.

In April, China said it would allocate $62 billion from its foreign exchange reserves to three state-owned ‘policy banks’ in order to support the New Silk Road project and create infrastructure links with foreign markets.

The Silk Road (or Silk Route) is an ancient trans-Asian trade route connecting China to Europe and the Mediterranean Sea. The route was named after the lucrative Chinese silk trade.

Article source: https://www.rt.com/business/332631-china-iran-train-arrives/?utm_source=rss&utm_medium=rss&utm_campaign=RSS

IMF warns Ukraine: fight corruption or lose funding

“For us, it would be ideal if the IMF was out of here. We withdrew the IMF from Georgia within a year. Got rid of them, thank God,” said the politician who was granted Ukrainian citizenship in 2015.

“The IMF is like a surgeon. When you need a bandage on the finger, he says, why bandage? Let’s cut off your entire hand, why bother?” added Saakashvili.

On February 10, IMF Chief Christine Lagarde said Ukraine has not achieved significant progress in the fight against corruption, so the country’s financial support could be suspended.

“Without a substantial new effort to invigorate governance reforms and fight corruption, it’s hard to see how the IMF-supported program can continue and be successful,” said Lagarde.

The IMF is funding Ukraine to the tune of $17.5 billion. In 2015, Kiev got $6.7 billion, and was looking to get another two tranches of $1.7 billion. But the funding was postponed.

The statement from Lagarde came a week after the abrupt resignation of Ukraine’s Economy Minister Aivaras Abromavicius. He left his post, saying he did not want to provide “cover” for widespread government corruption.

Abromavicius accused the authorities of creating obstacles to his reforms; the allegations included President Petro Poroshenko’s administration. The methods were “ranging from a sudden removal of my security detail, to the pressure to appoint questionable individuals to my team or to key positions in state-owned enterprises.”

Saakashvili publicly supported Abromavicius, agreeing with him that the reforms are being blocked by Igor Kononenko, Poroshenko’s key business partner and Ukrainian deputy.

“Lithuanians and Georgians are forced to take on the function of defenders of the country from some unscrupulous ethnic Ukrainians, who gained power,” said Saakashvili.

Article source: https://www.rt.com/business/332628-saakashvili-imf-ukraine-out/?utm_source=rss&utm_medium=rss&utm_campaign=RSS

​New GDP calculation puts India growing faster than China

India’s growth was 7.3 percent in the last quarter of 2015, according to official government figures. New Delhi says it expects growth for the fiscal year ending March 2016 to accelerate to 7.6 percent – the highest for five years.

Growth of the world’s second-largest economy, on the contrary, slowed to 6.9 percent last year from 7.3 percent in 2014. This was the worst result for China in 25 years.

Experts say India’s economic growth was boosted by sliding oil prices, investment and demographic factors.

India is the third largest importer of crude oil behind China and the US. Energy makes up almost 70 percent of the country’s imports.

READ MORE: China’s economic growth slowest in quarter century

The oil effect was the biggest driver of growth, according to India‘s chief economist at JPMorgan Sajjid Chinoy who was cited by the Financial Times.

But a boost in investment also made a difference. The country has attracted around $26.5 billion in foreign investments in the first nine months of 2015 which is 18 percent more than in the same period the previous year.

The country’s population is projected to be the world’s youngest by 2020, with a third of Indians aged 15 to 34 years.

India’s Prime Minister Narendra Modi has promised to modernize the country, boost manufacturing and infrastructure, and attract more investment.

However, some economists remain skeptical about the latest growth figures for Asia’s third largest economy, considering weak exports, railway freight, and other financial data.

“The challenge before India is to sustain a 9-10 percent growth rate for the next three decades,” said Amitabh Kant, India’s secretary for industrial policy and promotion. “This can be achieved only if India continues to offer an easy ecosystem for businesses to flourish and robust manufacturing sector growth.”

Article source: https://www.rt.com/business/332597-india-outstrips-china-growth/?utm_source=rss&utm_medium=rss&utm_campaign=RSS

“A deal will be reached if other producers join the initiative,” said Russian Energy Minister Aleksandr Novak after the meeting with his Saudi counterpart.

Saudi Oil Minister Ali Al-Naimi said freezing output at January levels would be “adequate” however the country still wants to meet the demand of its customers.

Saudi Arabia has insisted it won’t cut production unless major producers outside the cartel cooperate. Russian Energy Minister Aleksandr Novak has said cooperation is possible if other producers joined in.

However, the CEO of Russia’s biggest oil producer Rosneft Igor Sechin said last week that his company would defend traditional markets and raised doubts about production cuts. “Tell me who is supposed to cut? Will Saudi Arabia cut production? Will Iran cut production? Will Mexico cut production? Will Brazil cut production? Who is going to cut?” asked Sechin.

“We are working on preserving our traditional markets and we will supply those markets with oil in a competitive battle,” he added.

OPEC members Venezuela and Nigeria had called for a meeting to discuss crude prices that have fallen over 70 percent since 2014. Plunging prices finally forced producers unwilling to cut production to the negotiating table.

While Venezuela has been by far the hardest-hit big crude producer, current oil prices make it difficult for Russia to balance its budget. Riyadh’s budget has also taken a hit , running an official $98 billion budget deficit in 2015. IMF estimates dispute official Saudi figures, placing the Kingdom’s budget deficit at $140 billion.

Speculators ruled the oil markets on Tuesday as renewed hope of production cuts sent crude prices nearly six percent higher. A sharp sell off followed on the news of the Russian-Saudi deal, but prices stayed in positive territory with Brent crude trading near $34 per barrel, and US benchmark WTI futures around $30 per barrel, as of 10:30 a.m. GMT.

“A freeze would not create an immediate U-turn but it creates a better foundation for the price recovery in the second half,” Olivier Jakob, head of oil consultants Petromatrix said in a note to clients, quoted by Bloomberg.

Article source: https://www.rt.com/business/332583-russia-saudi-arabia-oil/?utm_source=rss&utm_medium=rss&utm_campaign=RSS

SP downgrades Japan over weak economic growth

On an annualized basis the economy contracted 1.4 percent during the period. Economists had predicted a 1.2 percent fall, but actual numbers are worse because of a sharp decline in consumption.

Private consumption, which makes up 60 percent of Japan’s GDP, dropped 0.8 percent, which is more than the predicted 0.6 percent decline, a sign the government’s stimulus policies have so far failed to make the Japanese spend more.

“The downside risks to Japan’s economy are likely to increase as the yen’s gains may damp capital spending and exports, and private consumption also is looking weak. There’s no clear driver to support Japan’s economy,” Yuichi Kodama, chief economist at Meiji Yasuda Life Insurance in Tokyo told Bloomberg.

Wages in Japan haven’t grown more than one percent in any year since 1997, and actually shrank in the last four years when adjusted for inflation.

With the yen climbing up to 113.8 to the dollar in recent weeks, investors expect even further stimulus from the central bank, with the Nikkei 225 index closing 7.16 percent higher on Monday.

Yoshihide Suga, Japan’s chief cabinet secretary has said the drop in consumer demand is linked to an exceptionally mild winter. “The economic fundamentals are good. We expect a steady recovery in business conditions,” he said.

Prime Minister Shinzo Abe’s plan to boost the economy – dubbed ‘Abenomics’ – was introduced after he won the December 2013 election. He is aiming to tackle deflation that Tokyo has been trying to address for almost 20 years. Abe also wanted to boost demand and investment as well as weaken the yen to help local producers become more competitive.

Article source: https://www.rt.com/business/332493-japan-gdp-contraction-economy/?utm_source=rss&utm_medium=rss&utm_campaign=RSS

China’s economic growth slowest in quarter century

“International speculative forces have recently focused on shorting China,” he said in an interview with the Caixin financial magazine.

He added that Beijing would use its massive foreign exchange holdings to defend the currency.

“China has the world’s largest foreign exchange reserves,” said Xiaochuan. “We will not let speculative forces guide market sentiment.”

Following the supportive comments from the Central Bank and a decline of the US dollar, the Chinese yuan had its biggest one day-gain in more than a decade on Monday. The currency advanced 1.2 percent (the most since July 2005) to 6.4975 against the dollar as onshore traders returned from a week-long Lunar New Year holiday.

On Monday, the People’s Bank of China raised its daily fixing against the greenback by 0.3 percent – the most since November, to 6.5118.

In the first week of January the central bank depreciated the yuan against the dollar by more than 1.5 percent. That was the biggest drop in the yuan exchange rate since August 2015, when the devaluation of the Chinese currency strongly affected global stock markets.

Chinese government efforts to defend the currency have also led to a significant drop in foreign currency reserves. The country’s foreign reserves are currently at $3.23 trillion (lowest level since May 2012) after falling $420 billion over six months.

READ MORE: China stages biggest currency devaluation in 20 yrs to revive exports

According to official data from Beijing, the world’s second-biggest economy grew 6.9 percent in 2015, compared to a 7.3 percent in 2014. It is the worst result for the country since 1990.

In November, Beijing set a goal of no less than 6.5 percent annual growth for the next five years.

Article source: https://www.rt.com/business/332478-china-yuan-cb-speculations/?utm_source=rss&utm_medium=rss&utm_campaign=RSS

Kiev estimates loss from trade war with Moscow at $1.1bn a year

More than 500 trucks are prevented from entering the country, as blockade leaders want Kiev to halt the transit of Russian goods.

In a tit-for-tat response, Russia has banned Ukrainian trucks from entering the country.

“The measures will be in place until a settlement of the illegal blocking of Russian vehicles in Ukrainian territory by Ukraine,” Russia’s transport ministry said in a statement.

The ministry added that what is happening is a flagrant violation of the agreement between the governments of Russia and Ukraine on international transport.

Ukrainian Prime Minister Arseny Yatsenyuk said the transit of Russian trucks through Ukraine has been stopped until Moscow explains the changes concerning the transit of Ukrainian trucks through Russia.

Transporting goods by truck between Russia and Ukraine has already been complicated since the Kremlin changed transportation rules for Ukrainian goods exported to Kazakhstan through Russia this year. Ukraine must now transport goods to Belarus in sealed containers. The freight must have GLONASS navigation system installed when the goods enter Russia.

The rule change came after Moscow suspended the free trade treaty with Ukraine at the beginning of the year. The Russian government said Ukraine’s open borders with the EU compromise the country’s interests and economic security. Moscow is concerned that without such a barrier, Ukraine could illegally supply embargoed European goods to Russia.

The Kremlin also banned food imports from Ukraine in response to the country joining anti-Russian sanctions.

Earlier, Poland stopped Russian trucks using its territory after a transit agreement expired and Moscow and Warsaw failed to agree a new one. As a result, Russian trucks traveling from Western Europe have been using routes through Ukraine, Slovakia and Hungary.

Article source: https://www.rt.com/business/332466-ukraine-bans-russian-trucks/?utm_source=rss&utm_medium=rss&utm_campaign=RSS