Iran oil output at lowest since 1980s

The IEA said it was becoming difficult to determine where Iranian oil was being shipped as Iran’s national oil company shut off satellite tracking systems on its ships (Reuters/File Photo)
Updated 14 June 2019
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Iran oil output at lowest since 1980s

  • The US in November reimposed sanctions on exports of Iranian oil
  • President Donald Trump pulled out of a 2015 accord to curb Tehran’s nuclear program

LONDON/PARIS: Iran’s oil production has dropped to its lowest level since the 1980s as the full force of US sanctions weighed on exports, the International Energy Agency (IEA) said on Friday.
The US in November reimposed sanctions on exports of Iranian oil after President Donald Trump pulled out of a 2015 accord to curb Tehran’s nuclear program. Eight economies, including China and India, were granted waivers for six months — which expired at the beginning of May.
That has had a huge impact on Iran’s energy industry, with production plunging by 210,000 barrels per day (bpd) in May to 2.4 million bpd, its lowest levels since the Iran-Iraq war, the IEA said. Exports fell by 480,000 bpd to 810,000 bpd — less than a third of what it was exporting a year ago.
The IEA said sanctions have not yet completely cut off Iranian oil exports, but they have fallen drastically. It added that it was becoming difficult to determine where Iranian oil was being shipped as Iran’s national oil company shut off satellite tracking systems on its ships.
The news came as the Paris-based IEA, which coordinates the energy policies of industrial nations, revised down its global 2019 demand growth estimate by 100,000 barrels to 1.2 million bpd, but said it would climb to 1.4 million bpd for 2020.
“The main focus is on oil demand as economic sentiment weakens ... The consequences for oil demand are becoming apparent,” the IEA said in its monthly oil report. “The worsening trade outlook (is) a common theme across all regions.”

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480,0000

Decline of Iran’s oil exports in May, in barrels per day.

The oil demand growth forecast assumes the maintenance of US and Chinese tariffs imposed on goods in 2018, but the IEA said it had not factored in further US tariffs announced in May.
The IEA also attributed lackluster demand growth in the first half of the year to a slowdown in the petrochemicals industry in
Europe, warmer than average weather in the northern hemisphere and stalled US gasoline and diesel demand.
Demand growth was likely to pick up to 1.6 million bpd in the second half of the year on government measures to mitigate the economic slowdown and robust consumption in the non-developed world.
“Stimulus packages are likely to support growth in the short term. In addition, the major central banks have stopped or slowed interest rate increases, which should support growth in (the second half of 2019) and 2020,” the IEA said.
US sanctions on Iran and Venezuela, an output cut pact by the Organization of the Petroleum Exporting Countries (OPEC) plus its allies, fighting in Libya and attacks on tankers in the Gulf of Oman added only limited uncertainty to supply, the IEA said. Surging US supply as well as gains from Brazil, Canada and Norway would contribute to an increase in non-OPEC supply of 1.9 million bpd this year and 2.3 million bpd in 2020.
The IEA’s latest monthly report comes a day after attacks on two tankers in the Gulf of Oman, which caused oil prices to briefly shoot more than 4 percent higher, in the second spate of incidents in a month in the strategic shipping lane.
With some 20 percent of the world’s oil passing through the Strait of Hormuz, a disruption to shipping could roil markets.

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Emirates NBD profit surges on asset sale and forex gains

Updated 17 July 2019
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Emirates NBD profit surges on asset sale and forex gains

  • Dubai’s largest bank reports 80 percent rise in net profit for second quarter

DUBAI: Emirates NBD, Dubai’s largest bank, reported an 80 percent rise in second-quarter net profit helped by the sale of a stake in Network International and strong non-interest income on foreign exchange gains.

The result included a gain of 2.1 billion dirhams ($572 million) from the sale of a stake in digital payment provider Network International in an initial public offering in London in April.

The earnings showed that top banks in the UAE have still withstood strains from a sluggish economy and a property downturn in Dubai.

Second-quarter net profit jumped 80 percent to 4.74 billion dirhams. EFG Hermes had expected a net profit of 4.06 billion in the second quarter.

The bank said net interest income rose 6 percent in the second-quarter from a year earlier, as growth in assets offset a drop in net interest rate margins.

Non-interest income surged 23 percent, helped by gains in foreign exchange income and investment banking activities.

Provisioning for bad debts more than doubled to 656 million dirhams in the second quarter from a year earlier.

The bank said the cost of risk had increased in 2019 to a more normalized level from relatively better credit quality conditions in 2018.

Cost of risk reflects the price a lender pays to manage its risk exposure. In 2018, Emirates NBD signaled that it expected cost of risk to revert to a long-term level of 80-100 basis points from the 63 basis points seen in 2018.

“The increased cost of risk of 82 basis points in H1 2019 is a result of an expectation of a reversion of credit quality to more normalized levels from the benign conditions in 2018, coupled with the expectation of lower write-backs and recoveries,” it said.

Credit-rating agency Moody’s had warned earlier this year provisioning charges for top banks in the UAE will increase in 2019 owing to pressure in the property and the retail sectors.

The Dubai lender said its net profit surged 49 percent in the first half of the year. “Core operating profit advanced 8 percent compared to the first half of 2018, helped by loan growth, higher foreign exchange income and increased investment banking activity,” the bank’s chief executive Shayne Nelson said in a statement.

Nelson said that the bank continued to make progress on the acquisition of Turkey’s Denizbank and expects this transaction to close in the third quarter of 2019.

Emirates NBD said in April that it was buying Denizbank from Russia’s Sberbank at a roughly 20 percent discount to a previously agreed price, after a steep fall in the Turkish lira.