Under US sanctions, Iran and Venezuela strike oil export deal — Reuters

Under US sanctions, Iran and Venezuela strike oil export deal — Reuters
A gas flare on an oil production platform in the Soroush oil fields is seen alongside an Iranian flag in the Arabian Gulf. (Reuters)
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Updated 25 September 2021

Under US sanctions, Iran and Venezuela strike oil export deal — Reuters

Under US sanctions, Iran and Venezuela strike oil export deal — Reuters
  • Venezuela has agreed to swap its heavy oil for Iranian condensate that it can use to improve the quality of its tar-like crude

CARACAS/HOUSTON/WASHINGTON: Venezuela has agreed to a key contract to swap its heavy oil for Iranian condensate that it can use to improve the quality of its tar-like crude, with the first cargoes due this week, five people close to the deal said.
As the South American country seeks to boost its flagging oil exports in the face of US sanctions, according to the sources, the deal between state-run firms Petroleos de Venezuela (PDVSA) and National Iranian Oil Company (NIOC) deepens the cooperation between two of Washington’s foes.
One of the people said the swap agreement is planned to last for six months in its first phase, but could be extended. Reuters could not immediately determine other details of the mwpact.
The oil ministries of Venezuela and Iran, and state-run PDVSA and NIOC did not reply to requests for comment.
The deal could be a breach of US sanctions on both nations, according to a Treasury Department email to Reuters which cited US government orders that establish the punitive measures.
US sanctions programs not only forbid Americans from doing business with the oil sectors of Iran and Venezuela, but also threaten to impose “secondary sanctions” against any non-US person or entity that carries out transactions with either countries’ oil companies.
Secondary sanctions can carry a range of penalties against those targeted, including cutting off access to the US financial system, fines or the freezing of US assets.
Any “transactions with NIOC by non-US persons are generally subject to secondary sanctions,” the Treasury Department said in response to a question about the deal. It also said it “retains authority to impose sanctions on any person that is determined to operate in the oil sector of the Venezuelan economy,” but did not specifically address whether the current deal is a sanctions breach.
US sanctions are often applied at the discretion of the administration in power. Former US President Donald Trump’s government seized Iranian fuel cargoes https://www.reuters.com/article/us-usa-iran-cargo-idUSKCN25A2AH at sea bound for Venezuela for alleged sanction busting last year, but his successor Joe Biden has made no similar moves.
In Washington, a source familiar with the matter said the swap arrangement between Venezuela and Iran has been on the radar screens of US government officials as a likely sanctions violation in recent months and they want to see how far it will go in practical terms.
US officials are concerned, the source said, that Iranian diluent shipments could help provide President Nicolas Maduro with more of a financial lifeline as he negotiates with the Venezuelan opposition toward elections.
Sanctions on both nations have crimped their oil sales in recent years, spurring NIOC to support Venezuela — including through shipping services and fuel swaps — in allocating exports to Asia.
In a meeting at the UN General Assembly in New York on Wednesday, the foreign ministers of Venezuela and Iran publicly stated their commitment to stronger bilateral trade, despite US attempts to block it.
Trump’s tightening of sanctions contributed last year to a 38 percent fall in Venezuela’s oil exports — the backbone of its economy — to their lowest level in 77 years and curtailed sources of fuel imports, worsening gasoline shortages in the nation of some 30 million people.
A US Treasury spokesperson said the department was “concerned” about reports of oil deals between Venezuela and Iran, but had not verified details.
“We will continue to enforce both our Iran and Venezuela-related sanctions,” the spokesperson said. Treasury “has demonstrated its willingness” to blacklist entities who support Iranian attempts to evade US sanctions and who “further enable their destabilizing behavior around the world,” the official added.
The swap contract would provide PDVSA with a steady supply of condensate, which it needs to dilute output of extra heavy oil from the Orinoco Belt, its largest producing region, the people said. The bituminous crude requires mixing before it can be transported and exported.
In return, Iran will receive shipments of Venezuelan heavy oil that it can market in Asia, said the people, who declined to be identified as they were not authorized to speak publicly.

CARGOES THIS WEEK
PDVSA has boosted oil swaps to minimize cash payments since the US Treasury Department in 2019 blocked the company from using US dollars. Washington has also sanctioned foreign companies for receiving or shipping Venezuelan oil.
Since last year, PDVSA has imported two cargoes of Iranian condensate in one-off swap deals to meet specific needs for diluents, and it has also exchanged Venezuelan jet fuel for Iranian gasoline.
The new contract would help PDVSA secure a source of diluents, stabilizing exports of the Orinoco’s crude blends, while allowing its own lighter oil to be refined in Venezuela to produce badly needed motor fuel, three of the people said.
The first 1.9 million barrel cargo of Venezuela’s Merey heavy crude under the new swap set sail earlier this week from PDVSA’s Jose port on the very large crude carrier (VLCC) Felicity, owned and operated by National Iranian Tanker Co. (NITC), according to the three people and monitoring service TankerTrackers.com.
NITC, a unit of NIOC, did not reply to a request for comment.
The vessel was not included in PDVSA’s monthly port schedules for September, which lists planned imports and exports. However, TankerTrackers.com identified it while at Jose this month.
The Venezuelan crude shipment is a partial payment for a cargo of 2 million barrels of Iranian condensate that arrived in Venezuela on Thursday, according to the three sources and one of PDVSA’s port schedules.

LITTLE ENFORCEMENT
Last year, the previous Trump administration seized over 1 million barrels of Iranian fuel bound for Venezuela and blacklisted five tanker captains, as part of a “maximum pressure” strategy, but the United States has not interdicted recent Iranian supplies to Venezuela.
The US State Department declined to comment on the deal. A Treasury spokesperson did not respond to a Reuters question on how concerned the government might be that Iran-Venezuela deals would allow PDVSA to step up exports.
US government officials have insisted they do not plan to ease sanctions on Venezuela unless Maduro takes definitive steps toward free and fair elections.
Trump’s curbs on established companies doing business with PDVSA prompted the socialist-ruled nation to turn to swaps with Iran and other countries, while trading with a series of little-known customers.
PDVSA’s new customers and swaps have allowed it to keep exports stable around 650,000 barrels per day (bpd) this year, after they zigzagged in 2020.
However, a worsening shortage of diluents has recently limited oil exports, placing the Orinoco Belt production in an “emergency,” according to PDVSA documents from August and September related to its output status that were reviewed by Reuters.
PDVSA plans to mix the Iranian condensate with extra heavy oil to produce diluted crude oil, a grade demanded by Asian refiners that it has struggled to export since late 2019 when suppliers halted diluent shipments due to sanctions, the three sources said.


Saudi CMA launches fifth round of fintech 'sandbox' licenses

Saudi CMA launches fifth round of fintech 'sandbox' licenses
Updated 13 sec ago

Saudi CMA launches fifth round of fintech 'sandbox' licenses

Saudi CMA launches fifth round of fintech 'sandbox' licenses

RIYADH: The Saudi Capital Market Authority (CMA) has launched its fifth round of fintech sandbox licenses, the Saudi Press Agency reported.

A sandbox, established through the regulator’s Financial Technology Lab, allows fintech startups and other firms to conduct live experiments under its supervision.

The authority said it will accept applications for financial technology test permits from firms until December 15.

The body launched its first fintech sandbox in February 2018, handing out 17 permits across five different product areas that included social trading platforms and automated advisor services.


Asia’s growth trimmed; UK inflation eases off slightly: Economic wrap

Asia’s growth trimmed; UK inflation eases off slightly: Economic wrap
Updated 16 min 57 sec ago

Asia’s growth trimmed; UK inflation eases off slightly: Economic wrap

Asia’s growth trimmed; UK inflation eases off slightly: Economic wrap

In its new regional outlook, the International Monetary Fund cut its growth forecast for Asia in 2021 to 6.5 percent, compared to the 7.6 percent it speculated in April. 

The international organization cited supply chain disruptions, inflation fears and a rise in Covid-19 infections as factors that could hamper growth in the region.

However, the 2022 growth forecast has been upwardly tweaked to 5.7 percent — up from the 5.3 percent April forecast.

Meanwhile, China is expected to grow by 8 percent this year and 5.6 percent in 2022.

UK inflation eases

The UK’s annual inflation rate tapered off to 3.1 percent in September 2021 down from its nine-year high of 3.2 percent in August, data from the Office for National Statistics revealed. 

Transport prices rose by 8.4 percent, helping fuel some of the country’s inflationary pressures. Conversely, rises in restaurants and hotels costs eased to 5.1 percent in September compared to 8.6 percent in August.

Month-on-month inflation also decreased to 0.3 percent in September — down from 0.7 percent in August.

In addition, the yearly core inflation rate, which excludes price changes in volatile items like food and energy, reached 2.9 percent in September, falling from 3.1 percent in the previous month.

German producer prices

Germany’s annual rise in producer prices climbed to 14.2 percent in September, according to official data.

Surging energy prices, last year’s low base effects and the current supply chain problems all meant that the country experienced its highest increase since October 1974.

Energy costs leapt by 32.6 percent while prices of intermediate goods rose by 17.4 percent.

This was accompanied by a month-on-month 2.3 percent increase in producer prices in September.

Japan’s trade deficit

The Japanese trade balance recorded a deficit of JPY622.8 billion ($5.44 billion) in September, compared to a JPY667.4 billion ($5.83 billion) surplus in the same month of last year, official data showed. This is the second consecutive month in which a deficit was posted for the country. 

Japanese imports leapt to a 34-month high of JPY7,463 billion ($65.19 billion) in September as it increased by an annual rate of 38.6 percent. Energy imports soared by 90 percent while purchases of electrical machinery jumped by 33.2 percent. Australian imports experienced the highest increase, climbing by 99.5 percent.

Meanwhile, the country’s exports jumped by 13 percent year-on-year to JPY6,841 billion ($59.76 billion) in September 2021. This was fuelled by a 23.7 percent increase in machinery exports. Exports of chemicals also rose considerably, growing by a 27.4 percent yearly rate.

Fed to hold on rates

A majority of economists expect the Federal Reserve to wait until 2023 before raising its rates, a survey conducted by Reuters showed.

Surveyed economists think that the biggest risk facing the US economy in the coming period is rising inflation.

China’s FDI 

Based on China's commerce ministry data, foreign direct investment (FDI) inflows to the country surged by 19.6 percent in the first nine months of 2021, when compared to the same period of the last year, to reach $134.7 billion.


Saudi Arabia, Kuwait, UAE reiterate support for Bahrain's fiscal program

Saudi Arabia, Kuwait, UAE reiterate support for Bahrain's fiscal program
Getty Images
Updated 29 min 17 sec ago

Saudi Arabia, Kuwait, UAE reiterate support for Bahrain's fiscal program

Saudi Arabia, Kuwait, UAE reiterate support for Bahrain's fiscal program
  • The fiscal balance program - a set of reforms aimed at balancing the budget - was linked to the pledged $10 billion

Saudi Arabia, Kuwait and the United Arab Emirates reiterated their support for Bahrain's plans to balance its budget, a move expected to help their neighbor in the debt capital markets despite delays in plans to fix its heavily indebted finances.


The three Gulf allies extended a $10 billion aid package to Bahrain in 2018 to help it avoid a credit crunch.

Last month Bahrain said that due to the coronavirus crisis last year, it had postponed the target year for a balanced budget to 2024, and announced plans to hike a value-added tax to boost state coffers.


The fiscal balance program - a set of reforms aimed at balancing the budget - was linked to the pledged $10 billion.

The ministers of finance of wealthier Saudi Arabia, Kuwait, and the UAE met with Bahrain's finance minister on Oct. 19 to discuss Bahrain's progress in improving its finances.

"The ministers welcomed the efforts made by the government of Bahrain in implementing the Fiscal Balance Program, and the progress made by the government despite the challenges posed by the COVID-19 pandemic", the three countries said in a joint statement.

"The Ministers affirmed their support to the Kingdom of Bahrain’s efforts in pursuing further reforms to enhance fiscal stability and strengthen sustainable economic growth."

Bahrain's delaying of its fiscal balance program, which pushed back the zero-deficit target by two years, was seen as unlikely to deter investors from buying its debt due to expectations of continued support from richer Gulf allies, bankers and analysts have previously told Reuters.

Bahrain's public debt climbed to 133 percent of gross domestic product (GDP) last year from 102 percent in 2019, according to the International Monetary Fund.

S&P forecasts Bahrain's budget deficit, which was 16.8 percent of GDP last year, to average 5 percent between 2021 and 2024, excluding the impact of a possible hike in value-added tax.

The Arab Monetary Fund assessed the fiscal program achievements, the statement said.

 

 

 

 


Saudi Minister uses US trip to urge investors to 'seize opportunities' in the Kingdom

Saudi Minister uses US trip to urge investors to 'seize opportunities' in the Kingdom
Updated 30 min 9 sec ago

Saudi Minister uses US trip to urge investors to 'seize opportunities' in the Kingdom

Saudi Minister uses US trip to urge investors to 'seize opportunities' in the Kingdom

The Saudi minister of investment will stress the Kingdom's position as a major global investment destination during his visit to the US, according to the Saudi Press Agency. 

Khalid Al-Falih will meet a group of US officials on Wednesday to strengthen the existing strategic trade and investment partnership between the two countries, the agency reported. 

“We consider American investors to be our partners, and we hope that they will seize the tremendous opportunities that are presented in the transitional stage we are living in,” Al-Falih said in a statement. 

The trip follows the launch of the National Investment Strategy by the crown prince, Mohammed bin Salman, last week.

"The National Investment Strategy will bring about a fundamental change in the investment landscape in Saudi Arabia, which will provide unprecedented opportunities and advantages for investors,” the minister noted. 


Sovereign Fund of Egypt CEO bids to double assets to $1.8bn in a year

Sovereign Fund of Egypt CEO bids to double assets to $1.8bn in a year
Updated 40 min 13 sec ago

Sovereign Fund of Egypt CEO bids to double assets to $1.8bn in a year

Sovereign Fund of Egypt CEO bids to double assets to $1.8bn in a year

The Sovereign Fund of Egypt plans to double its assets from between EGP13-14 billion ($827-$891 million) to as much as EGP28 billion next year, said chief executive Ayman Soliman, reported Al Sharq.

Soliman said the fund’s drive for growth will focus on infrastructure, water desalination and renewable energy, such as the production of green energy with Norwegian green energy firm Scatec and Abu Dhabi-Dutch joint venture fertiliser producer Fertiglobe.

Last week, the fund signed a deal with Scatec and Fertiglobe to build a 50 to 100 megawatt ammonia plant in Ain Sokhna, 75 miles east of Cairo, for an undisclosed sum, which it said, “is the first step towards developing a green hydrogen hub in Egypt”.

The head of the fund said its investments over the next 12 months would also include warehouses for strategic goods, medicine and education.

The fund, established in 2018, says it was set up to co-invest with local and foreign financial partners to “increase the private sector’s role in the economy and create jobs for Egypt’s young population”