Archives for June 2019

The payments mechanism was established by the European Union to keep trading with Tehran despite US sanctions in order to keep the nuclear deal with Iran alive.

The US re-imposed sanctions against the Islamic Republic following Washington’s withdrawal from the 2015 Iran nuclear deal, officially known as the Joint Comprehensive Plan of Action (JCPOA).

Also on rt.com US will sanction any country that buys oil from Iran, no exemptions – special envoy

The US has been mounting pressure on Iran and anyone breaking its sanctions against the country, threatening to punish any company that continues doing business with the Islamic Republic, including the purchasing of Iranian oil.

“We will sanction any imports of Iranian crude oil… There are right now no oil waivers in place,” US Special Representative to Iran Brian Hook said in Friday, after it was reported that China is still importing Iranian crude.

On Friday, seven EU countries said in a joint statement they are working with Britain, France, and Germany on establishing trade channels to Iran, including “one of the foremost of these initiatives” – the Instrument in Support of Trade Exchanges (INSTEX).

Also on rt.com Russia Iran ditching dollar for trade in favor of national currencies – Moscow’s envoy to Tehran

However, the EU’s efforts to set up the long-promised payment channel have not satisfied Tehran. Earlier this week, Iranian Foreign Ministry spokesman Seyed Abbas Moussavi called INSTEX a “faux thing of no practical use,” according to Iranian media.

He later said that if this turns out to be the case, the Islamic Republic will not accept it and may change its commitments under the nuclear deal that Brussels is trying to hold on to.

For more stories on economy finance visit RT’s business section

Article source: https://www.rt.com/business/462931-iran-says-instex-ready/?utm_source=rss&utm_medium=rss&utm_campaign=RSS

“[Huawei] will always be on the same line of interest, and if we don’t load Google’s system, Google will lose 700-800 million users in the future,” Ren Zhengfei said in an interview to CNBC.

The Chinese telecommunications major was blacklisted last month by the Trump administration after Washington accused the company of spying for Beijing. Google, whose Android OS is used in many of Huawei’s phones, was among the American tech companies prohibited from dealing with Huawei.

Also on rt.com Spain rolls out 5G network using Huawei gear despite US blacklisting Chinese tech giant

The Silicon Valley firm is allowed to send software updates to Huawei products until August 19 this year, but when the ban fully comes into force the Chinese phone maker is set to lose access to some Google apps and will only have access to the open source version of the Android OS.

Huawei said earlier that it is working on its own mobile operating system called Hongmeng and has already filed a trademark. In his interview, the CEO stressed that Hongmeng will allow the company to protect its growth if it is forced to replace Android, which Huawei does not want to do.

Also on rt.com Huawei looks to Russian technology to replace Google’s Android on its smartphones

The US crackdown on Huawei comes as the world’s two biggest economies are locked in a simmering trade war. Washington has also been trying to persuade its overseas allies to turn away from Huawei technology and equipment, as the Chinese firm is actively involved in the 5G rollout across Europe.

While some EU members remain cautious over dealing with Huawei, such as the UK, others do not see any evidence of the Chinese firm posing security risks. Currently, Germany and Hungary are not excluding Huawei from participation in the high-speed network’s launch, while Spain has already used Huawei equipment when it rolled out its 5G network in 15 cities.

For more stories on economy finance visit RT’s business section

Article source: https://www.rt.com/business/462919-google-millions-users-huawei/?utm_source=rss&utm_medium=rss&utm_campaign=RSS

“I think we’re going to have some very big things to announce. Very big trade deal,” Trump said, as cited by the media at the beginning of talks with Indian Prime Minister Narendra Modi on Friday. He did not elaborate on the matter, just adding that “big things” are coming in terms of trade and manufacturing.

The two leaders are taking part in the G20 meeting in Osaka, Japan. Later in the day, Trump and Modi asked officials to restart trade talks to resolve tariffs issues, according to Indian Foreign Secretary Vijay Gokhale.

Also on rt.com India slaps retaliatory tariffs on 28 US products ahead of Pompeo’s visit

The Trump-Modi meeting comes shortly after the US president hit out at New Delhi’s retaliatory tariffs targeting key US exports to India, including almonds, walnuts, apples, as well as some metal and chemical products. The move was postponed several times while India was hoping for progress in trade talks.

India’s tariff hikes came after the Trump administration removed trade benefits India enjoyed under the Generalized System of Preferences (GSP) program. Around $5.6 billion-worth annually of Indian products, including textiles, leather, gems, and jewelry, used to have duty-free access to the US market under the program.

Also on rt.com Asian economies to take over ‘7% Growth Club’ in 2020s, but China is not on the list

While India was only threatening to respond to the unfriendly trade policies, it said that the duties are equivalent to Washington’s own increase in tariffs on Indian products. Last March, Washington hit all imported steel and aluminum with 25 and 10 percent tariffs. India, which is one of the largest steel producers in the world, was granted no exemption from the measure.

For more stories on economy finance visit RT’s business section

Article source: https://www.rt.com/business/462903-us-india-big-trade-deal/?utm_source=rss&utm_medium=rss&utm_campaign=RSS

“Cooperation in terms of developing the use of our national currencies in international settlements seems very promising,” Putin said in Osaka, Japan at a meeting of BRICS leaders in advance of the G20 summit.

Also on rt.com BRICS countries to create own payment system to cut dependence on West

Five-nation bloc BRICS represents more than 40 percent of the world’s population. The five countries have a combined nominal GDP of US$18.6 trillion, which is about 23 percent of the gross world product.

According to International Monetary Fund estimates, member states are responsible for more than half of the global economic growth of the last 10 years.

READ MORE: BRICS bank to finance new projects in Russia India

According to the Russian president, the integration of payments systems and the establishment of an independent channel on information exchange could facilitate the stability of the banking systems of the five countries. “I think this is extremely important today,” he said.

Also on rt.com Ruble-yuan trade between Russia China makes dollar odd man out

Russia welcomes further expansion of the operating activities of the BRICS New Development Bank (NDB), which has already financed 35 investment projects worth more than $9 billion, Putin said.

The Shanghai-based bank NDB provides funding for infrastructure and sustainable development projects in emerging economies. It was established in 2014 and formally opened for business a year later.

For more stories on economy finance visit RT’s business section

Article source: https://www.rt.com/business/462896-putin-brics-national-currencies/?utm_source=rss&utm_medium=rss&utm_campaign=RSS

The document was signed by Russian Finance Minister Anton Siluanov and the head of the People’s Bank of China, Yi Gang, earlier in June, Izvestia reports.

Moscow and Beijing are currently developing new mechanisms of cross-border payments between Russian and Chinese businesses, the newspaper said, citing a letter from Deputy Finance Minister Sergey Storchak to Anatoly Aksakov, the head of the financial market committee of the State Duma (lower chamber of Russia’s parliament). The two sides may settle payment gateways between their domestic alternatives to the traditional SWIFT system, Russia’s System for Transfer of Financial Messages (SPFS) and China’s Cross-Border Inter-Bank Payments System (CIPS).

Also on rt.com Global trust in the US dollar is falling – Putin

The two countries will have to develop ruble and yuan financial instruments to boost cross-currency trade and mitigate risks of exchange rate fluctuations, according to Aksakov. He added that in the coming years, the share of settlements in national currencies between Russia and China could increase fivefold – from 10 to 50 percent.

The mechanism of payments in national currencies is set to be developed by next year. At first, major companies with state participation from sectors such as energy and agriculture will switch to it. The yuan-ruble payments will also be made on existing contracts which stipulate settlement in dollars.

Also on rt.com Foreign banks willing to join Russia’s alternative to SWIFT

China is Russia’s largest trading partner, with bilateral trade exceeding $107 billion. The two sides are also planning to double the current trade volume in the next few years.

For more stories on economy finance visit RT’s business section

Article source: https://www.rt.com/business/462884-russia-china-ruble-yuan-trade/?utm_source=rss&utm_medium=rss&utm_campaign=RSS

According to a survey by the Dallas Federal Reserve, the business activity index in Texas fell to -0.6 in the second quarter, down from a positive reading of 10.8 in the first quarter. A negative reading means that business activity actually contracted from the prior quarter, offering evidence that the slide in oil prices led to a pullback in spending and drilling.

While oil and gas production continued to rise in the second quarter, it did so at a slower pace than in months past. The Dallas Fed said that its spending index actually fell into negative territory, again, an indication of contraction.

The shale boom is about to go bust

A slowdown in drilling is felt most acutely by oilfield services companies, who make their money from drilling volume and activity, rather than from oil sales. Not only did activity dip, but the prices that oilfield services charge for their services fell sharply, and margins were “notably lower” in the second quarter, the Dallas Fed said.

Employment and wages also contracted. The Dallas Fed offers indices on “company outlook,” indices that further highlight the rising pessimism among most firms. The “aggregate uncertainty index” showed a surge of uncertainty from the sector, and it posted the highest reading since 2017.

In short, conditions appeared to have deteriorated in the second quarter, even as the industry posted a “gusher of red ink” in the first.

While the indices offer some quantitative data to back up the souring outlook for US shale, the metrics are also a bit high-level and abstract. The real color comes in the comments section of the Dallas Fed survey, where comments are anonymously submitted by oil and gas executives. These statements offer better clues into what’s really going on at the ground level.  

READ MORE on OilPrice: A ‘’Gusher Of Red Ink’’ For US Shale

For instance, one executive said that the oil price downturn in the second quarter has had a dramatic effect on industry conditions. The “biggest impact has been the rapid and accelerating lack of investor interest in both conventional and unconventional oil and gas. The securities of oil and gas companies now sell at a fraction of what they once commanded. Huge losses in these shares hamper new exploration. It looks like another round of bankruptcies and mergers,” the executive said.

Also on rt.com US ‘oil weapon’ could change geopolitics forever

There were countless others that offered similar sentiments. “It is very true that cash is drying up, and it is going to be hard to get financing to drill our wells,” one person wrote.

Meanwhile, the tidal wave of new natural gas supply crashed prices in West Texas last year, and Waha prices have at times fallen into negative territory. Flaring has spiked as a result of a lack of pipelines. Conventional wisdom says weak gas prices barely impact drillers because companies are really targeting oil. But apparently not everyone is immune to rock-bottom gas prices. “We had to shut-in a large natural gas field due to Waha Hub negative pricing,” one company executive said in the Dallas Fed survey.

Yet another called for “a conversation” about government regulation, perhaps mirroring the mandatory production cuts seen in Alberta this year. “We need to start a conversation between industry and government about bringing back pro-rationing (daily production allowables and monthly market factors) again. Nobody’s generating free cash flow,” the comment said. 

Also on rt.com Shale jobs in jeopardy despite oil price rally

Notably, a few outside forces are also having a negative impact on Permian drillers. One person said that “tariffs are raising prices of steel and other services and are a disastrous tool of the current regime in Washington,” while another person said that the increase in interest rates from the US Federal Reserve was “cutting cash-flows.” Another voiced concerns about rising uncertainty due to the US presidential election.

The only positive for the sector as of late is that oil prices have rebounded, with WTI moving back to the high-$50s per barrel on the back of Middle East tension and a sudden decline in inventories. Still, the shale sector was unprofitable at roughly those levels in the first quarter, and by all accounts, drillers continue to burn through cash. In fact, according to Rystad Energy, the return on investment from oil and gas wells in the Permian peaked in 2017.

The OPEC+ extension is likely in the bag, but that may only put a floor beneath prices, rather than leading to a more significant rally. With weak demand and supply continuing to rise, albeit at a slower rate, there is little reason for shale executives to feel optimistic.

This article was originally published on Oilprice.com

Article source: https://www.rt.com/business/462880-us-shale-bankruptcies-looming/?utm_source=rss&utm_medium=rss&utm_campaign=RSS