Zimbabwe being buffeted by its worst crisis

In this file photo taken on November 12, 2019 Customers, some of whom slept overnight in the queue, wait outside a bank the release of a new Zimbabwean currency in Harare on November 12, 2019. Zimbabwe is buffeted by its worst economic crisis in over a decade including scarcity of basics like the staple cornmeal, galloping prices of basic goods as the value of Zimbabwean dollars continues to fast depreciate. (AFP)
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Updated 29 June 2020

Zimbabwe being buffeted by its worst crisis

  • On Wednesday, the price of fuel in the country soared by up to 152 percent

HARARE: A Zimbabwean shopper in a Harare supermarket shook his head, grumbling as he returned a loaf of bread to a rack after finding the price had jumped by a third and he could no longer afford it.

Nearby, a more than a kilometer-long queue of cars waited for petrol at an empty fuel station in the hope it would receive a delivery.

Zimbabwe is being buffeted by its worst economic crisis in over a decade, including scarcity of basics like fuel and cornmeal.

Prices of basic goods gallop every week as the value of the Zimbabwean dollar continues to tumble, pushing official annual inflation to 785.6 percent in April.

Poverty is deepening among the majority of the population — UN aid agencies say some 7.7 million people, or half of the population, require food assistance.

A loaf of bread went up 36 percent last month and last week a 10-kilo sack of cornmeal jumped 30 percent.

On Wednesday, the price of fuel soared by up to 152 percent. A similar rise in January 2019 sparked countrywide demonstrations in which at least 17 people were killed.

“Things cannot continue this way. These people should just admit they have failed,” said Harare resident Timothy Bhaureni, referring to President Emmerson Mnangagwa’s government.

Mnangagwa, who took power in 2017 following a military coup pledging to revive the moribund economy, now blames the economic malaise on unnamed “political detractors.”

“We are witnessing a relentless attack on our currency and the economy in general through exorbitant pricing models,” Mnangagwa told his ZANU-PF party’s politburo on June 10.

In a dramatic move, and adding confusion to an already restless population, the government on Friday night suspended all mobile money transactions, the most widely used platform to make and receive payments in the crisis-ridden country.

It took the decision “to deal with malpractice, criminality and economic sabotage.”

But in a notice, the largest operator EcoCash, defied the order, urging its more than 10 million users to continue transacting.

The hardship and chaos has spurred discontent among ordinary people.

University of Zimbabwe’s political scientist Eldred Masunungure said the situation “points to volatility in the country, a comprehensively volatile situation both politically and in the economy where it’s very visible as it affects the livelihoods of the vast majority of the people.”

“Nothing points to stability, but I don’t want to overstate this because we have reached this crossroads many times before and the country has not collapsed.”

“The default position in the country is one of instability. It appears like the new normal,” he said.

Economist Prosper Chitambara of the Labour and Economic Development Institute of Zimbabwe think tank said Zimbabwe was on the brink of another round of hyperinflation.

The country’s inflation breached the 500-billion-percent mark in 2008, forcing it to trash its own currency.

“We are headed for tough times with the loss of value of the local currency. The economy is not growing,” said Chitambara.

“We are on the verge of hyperinflation. This increases economic uncertainty which is detrimental to private sector investment,” he said.

The World Bank predicts Zimbabwe’s economy will contract by 10 percent.


Iranian oil in perfect storm of storage shortage, low demand, sanctions

Updated 07 July 2020

Iranian oil in perfect storm of storage shortage, low demand, sanctions

  • Coronavirus, US economic action sees inventories reach bursting point

LONDON: Iranian oil production has reached its lowest point in almost four decades, according to industry experts, with the country’s storage facilities fast approaching full capacity.

The news comes amid a dip in Iran’s oil exports due to a crash in global demand, and in a period when its refineries have been hampered as a result of the coronavirus outbreak.

With over 11,000 confirmed fatalities, Iran has suffered the worst coronavirus outbreak in the Middle East, affecting all areas of industry. 

This has created a perfect storm for the country’s vital oil sector, with what little selling ability it has further disrupted by sanctions imposed by the US in 2018 following Washington’s withdrawal from the Iran nuclear deal.

Iran’s total liquid production dropped from 3.1 million barrels per day (bpd) in March this year to 3 million bpd in June, according to FGE Energy, which predicts that the figure will drop by an additional 100,000 bpd in July.

Crude production was as low as 1.9 million bpd in June, the lowest since the beginning of the Iran-Iraq war in 1981.

Exports also fell, with estimates varying depending on source — 100,000 bpd in May according to market intelligence firm Kpler, and around 210,000 bpd according to FGE — well under 10 percent of the 2.5 million bpd Iran exported in April 2018.

Iran’s onshore crude stocks, meanwhile, hit 63 million barrels in June, having been just 15 million barrels in January, according to FGE.

Kpler said Iran averaged 66 million barrels in storage throughout June, meaning that around 85 percent of the country’s total onshore storage capacity was full.

“However, it will technically not be possible to fill tanks to 100 percent, given technical constraints at storage tanks and potential infrastructure bottlenecks,” Homayoun Falakshahi, a senior analyst at Kpler, told Reuters.

Offshore the story is much the same, with options running out fast. Iran has 54 crude oil tankers, according to valuations specialist VesselsValue, and is thought to be using around 30 ships, mainly supertankers with a maximum capacity of 2 million barrels of oil each, to store over 50 million barrels of crude and condensate.

“The exact number of Iranian vessels on floating storage is a bit of a black box as they have all turned off their AIS (tracking transponder) signals,” said a spokesman for shipping group NORDEN.

“Storage is expected to continue as we do not see these vessels being able to trade anytime soon.”