Turkey raises tariffs on some US imports, escalates feud

The troubled lira tumbled to record lows against the euro and US dollar early this week. (Reuters)
Updated 15 August 2018
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Turkey raises tariffs on some US imports, escalates feud

ANKARA: Turkey announced Wednesday it is increasing tariffs on imports of certain US products, escalating a feud with the United States that has helped trigger a currency crisis.
In a decision announced in the Official Gazette, Ankara said it was imposing extra tariffs on imports of products including rice, vehicles, alcohol, coal and cosmetics.
Turkey’s Vice President Fuat Oktay said on Twitter that the tariffs on certain products were increased “within the framework of the principle of reciprocity in retaliation for the conscious economic attacks by the United States.”
The Turkish lira has dropped to record lows in recent weeks, having fallen some 42 percent so far this year. The currency has now stabilized at around 6.50 lira against the dollar.
Investors are worried not only about Turkey’s souring relations with the US, a longtime NATO ally, but also Turkish President Recep Tayyip Erdogan’s economic policies and the country’s high debt accumulated in foreign currencies.
Turkey has accused the United States of waging an “economic war” as part of a plot to harm the country.
Washington has imposed financial sanctions on two Turkish ministers and doubled steel and aluminum tariffs on Turkey, as US President Donald Trump tries to secure the release Andrew Brunson, an American pastor being tried in Turkey on espionage and terrorism-related charges.
The decision to impose new tariffs came a day after Erdogan said Turkey would boycott US electronic goods, singling out iPhones. He suggested Turks would buy local or Korean phones instead, although it was unclear how he intended to enforce the boycott.


Oil rises on expected OPEC cuts, but surging US supply drags

Updated 16 November 2018
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Oil rises on expected OPEC cuts, but surging US supply drags

  • Prices were mainly supported by expectations OPEC would start withholding supply soon
  • US output has surged by almost a quarter since the start of the year

SINGAPORE: Oil prices rose on Friday amid expectations of supply cuts from OPEC, although record US production dragged.
US West Texas Intermediate (WTI) crude oil futures were at $56.84 per barrel at 0353 GMT, up 38 cents, or 0.7 percent, from their last settlement.
Brent crude oil futures were up 48 cents, or 0.7 percent, at $67.10 per barrel.
Prices were mainly supported by expectations the Organization of the Petroleum Exporting Countries (OPEC) would start withholding supply soon, fearing a renewed rout such as in 2014 when prices crashed under the weight of oversupply.
OPEC’s de-facto leader Saudi Arabia wants the cartel and its allies to cut output by about 1.4 million barrels per day (bpd), around 1.5 percent of global supply, sources told Reuters this week.
However, Morgan Stanley warned a cut by the Middle East dominated producer group may not have the desired effect.
“The main oil price benchmarks — Brent and WTI — are both light-sweet crudes and reflect this glut,” the US bank said.
“OPEC production cuts are usually implemented by removing medium and heavier barrels from the market but that does not address the oversupply of light-sweet.”
Due to the structural oversupply that has emerged in the market from record production by many countries, Morgan Stanley said that “OPEC cuts are inherently temporary (because) all they can do is shift production from one period to another.”
While OPEC considers withholding supply, US crude oil production reached another record last week, at 11.7 million bpd, according to US Energy Information Administration (EIA) data published on Thursday.
US output has surged by almost a quarter since the start of the year.
The record output meant US crude oil stocks posted the biggest weekly build in nearly two years.
Crude inventories soared 10.3 million barrels in the week to Nov. 9 to 442.1 million barrels, the highest level since early December 2017.
This surge contributed to oil prices falling by around a quarter since early October, taking many by surprise.
“Oil bulls, us included, have capitulated and we no longer see oil climbing to $95 per barrel next year,” Bank of America Merrill Lynch said in a note.
While sentiment has turned bearish, some analysts warn that 2019 could be tighter than expected.
“We expect 2019 oil demand to reach 101.1 million bpd,” natural resources research and investment firm Goehring & Rozencwajg said, up from just under 100 million bpd this year.
At the same time, the firm said production outside North America was set to disappoint.
Add OPEC’s expected supply cuts, and Goehring & Rozencwajg said “those investors who are able to adopt a contrarian stance ... and stomach the volatility ... are being presented with an excellent investment opportunity” to buy into oil after the recent slump.
Bank of America agreed, saying “we believe oil is oversold and will likely bounce up from the current levels, as OPEC+ dials back production in December.”