Sunday, April 5, 2015

Oil prices up more than US$1, potential Iran deal impact seen taking months

Oil prices up more than US$1, potential Iran deal impact seen taking months

[SINGAPORE] Oil prices rose more than US$1 a barrel in early Asian trade on Monday, as last week's framework deal between Iran and global powers on Tehran's nuclear programme offers little chance for any significant increase in exports until 2016.
International benchmark Brent tumbled as much as 5 per cent on Thursday after a preliminary deal was reached with Iran, paving the way for more Iranian oil onto world markets if a comprehensive deal is reached by June.
However, analysts warned that a potential ramp-up in exports could take many months, and would not happen before 2016.
"While clearly a bearish headline, a final deal and full lifting of sanctions still face a number of obstacles," Morgan Stanley analysts said in a note. "Even if a final deal is reached, we do not expect any physical market impact before 2016,' they said.
Brent crude for May delivery was up US$1.07 at US$56.02 a barrel by 0051 GMT.
US crude for May delivery was 91 cents higher at US$50.05 a barrel.
The number of rigs drilling for oil in the United States declined by 11 this week to 802, the smallest decline since December.
Two weeks of thin declines in the US rig count have raised expectations that drilling activity is nearing a pivotal level that could dent production, bolster prices and coax idle rigs back to the field after a precipitous cull since October.
Asian shares rose and the dollar dropped on Monday, after a dismal US jobs report pushed up US Treasury yields as investors pared bets the US Federal Reserve would hike interest rates anytime soon.
REUTERS

Obama says a weakened Israel would be failure of his presidency

Obama says a weakened Israel would be failure of his presidency

PUBLISHED ON APR 6, 2015 8:00 AM
 2 81 0 0PRINTEMAIL
 
Mr Obama said while Israel has reason to be concerned about Iran, he defended the framework agreement on Iran's nuclear programme that negotiators drew up last week. -- PHOTO: EPA
WASHINGTON (AFP) - US President Barack Obama has said that a weakened Israel would be a "fundamental failure of my presidency," affirming solidarity with his country's long-time ally despite recent differences over the Iran nuclear deal.
Mr Obama said while Israel has reason to be concerned about foe Iran, he defended the framework agreement on Iran's nuclear programme that negotiators drew up last week.
Mr Obama made the comments to The New York Times in a 45-minute video interview on Saturday that was posted on Sunday.
"I would consider it a failure on my part, a fundamental failure of my presidency, if on my watch or as a consequence of work that I've done, Israel was rendered more vulnerable," Mr Obama said.

Jihadist cash lures Syria refugees as international aid dwindles

Jihadist cash lures Syria refugees as international aid dwindles

[DUBAI] Mohammad Deen, a Syrian refugee and father of six, struggles to find the money to meet his children's needs and worries who else might step in with an offer to help.
"If Daesh approaches my son and gives him US$300 to fight with them, he would do it," he said, using Islamic State's Arabic acronym.
Deen lives in a dilapidated house in northern Lebanon, and has no access to the dwindling international aid available to millions of displaced Syrians. Three of his children are disabled, while the son he's especially concerned about is 18, in the target age group for jihadist recruiters.
As Syria's war enters its fifth year, its refugees are fading deeper into the background.
At a conference in Kuwait last week, countries promised more aid, but donor fatigue has left humanitarian organisations unable to help people like Deen, and that's creating an opportunity for the Islamist militants who play a growing role in the conflict. This month, Islamic State and and al-Nusra Front militants took over much of the Yarmouk Palestinian refugee camp in Damascus.
"We take millions of youth in the heart of the Middle East and give them no hope, no education, no professional training, no jobs or a future," said Ian Egeland, secretary-general of the Norwegian Refugee Council and a former UN relief coordinator. "We still expect them not to radicalize? Of course they will radicalize."
Islamists Dominate Syria's conflict began in March 2011 with protests against President Bashar al-Assad, and spiraled into a war in which groups like Islamic State have come to dominate the opposition to Assad. The conflict has left at least 220,000 people dead and 1 million wounded, United Nations special envoy Staffan De Mistura said in January.
For 2015, almost US$3 billion are needed to help 12 million internally displaced Syrians, and another US$5.5 billion to support 4.2 million refugees in nearby countries, according to the UN High Commissioner for Refugees, the lead group coordinating Syrian aid.
The biggest groups of refugees are in Turkey, Lebanon and Jordan, with others in Iraq and Egypt.
Last year, the agency could only meet half of refugees' needs, and it may not even reach that level in 2015, according to Daniel Endres, the UNCHR's head of external relations.
"We're trying to do the reductions where it hurts least, but it will hurt," Mr Endres said in an interview in Dubai. Fewer aid dollars could force more children to drop out of school to work, and lead to the spread of malnutrition, he said.
Radicalization Islamic State offers monthly stipends of US$400 for local fighters and US$800 for foreign ones, as well as free housing, according to the Syrian Observatory for Human Rights, a UK- based organization that monitors the war. It gets the houses from seized land, and the money from oil sales, extortion and robbery among other sources, the OECD's Financial Action Task Force said in February.
Last year, the US led the Syria donor effort with US$1.7 billion, according to the UN. In the Middle East, Kuwait gave US$300 million and Saudi Arabia at US$130 million. Those sums are dwarfed by the more than US$30 billion that the oil-rich Gulf countries have spent propping up Egypt's economy after the army takeover in 2013.
On March 31, countries pledged US$3.8 billion at a donors conference in Kuwait, though not all past promises have been met.
'EVERY MEASURE'
"The needs are growing by virtually every measure," Samantha Power, the US Ambassador to the UN, said at the Kuwait meeting. "Yet too many countries are giving the same amount, or even less than they have in the past." The US pledged an additional US$507 million and Kuwait US$500 million. The United Arab Emirates promised about $100 million.
Donations have been scarce because the crisis "was much larger than expected, Sheikh Mohammad Abdullah Al-Mubarak Al- Sabah, minister of state for cabinet affairs in Kuwait, said in an interview.
In the countries hosting the refugees, the economic and social strains are growing.
Turkey has spent US$5.5 billion on the almost 2 million Syrian refugees it hosts, and only got US$250 million of external help, President Recep Tayyip Erdogan said last month. ''The international community says, 'what a great nation you are,'' but when it comes to money they don't reach into their pockets," he said.
COMPETING FOR JOBS
In Lebanon and Jordan, locals have complained about Syrians competing for water, education, medical treatment and jobs. Jordan hosts 1.4 million Syrians, about a fifth of them in camps. In Lebanon, the population of 4.5 million has swelled more than 25 per cent with the influx. The army has raided their informal settlements and arrested dozens suspected of ties to extremist groups.
In the Lebanese town of Arsal, Mayor Ali Hujeiri said it's not only poverty and the lure of money that attracts fighters. People who join Islamic State or other groups "are doing that out of their conviction as well," he said.
Still, he said, Islamic State is the top recruiter because they have more money thanks to their access to oil.
The Lebanese army and militants from Islamic State and al- Nusra Front clashed in Arsal last August. Lebanon hasn't set up camps for the refugees, amid fears that would heighten sectarian tensions already inflamed by the Syrian war.
At a refugee settlement in Minnieh in northern Lebanon, residents cataloged their grievances to an aid worker: contaminated water, not enough food, no money for rent.
Deen, the Syrian with six children, sums up the way some have turned to jihadist groups for money.
"Whoever grows a beard gets a dollar," he said. "While we are homeless and can't even secure food for our families."
BLOOMBERG

Greece agrees to repay IMF debt by April 9: Lagarde

Greece agrees to repay IMF debt by April 9: Lagarde

[WASHINGTON] Greece has agreed to repay its debt to the International Monetary Fund by April 9, IMF chief Christine Lagarde said after a meeting with Greek Finance Minister Yanis Varoufakis.
There was speculation ahead of the visit that Athens might fail to meet the 460-million-euro (S$683 million) IMF installment if forced to choose between the IMF and paying government workers.
Ms Lagarde said repaying the IMF debt was in the country's best interest.
"Continuing uncertainty is not in Greece's interest and I welcomed confirmation by the minister that payment owing to the Fund would be forthcoming on April 9th," Ms Lagarde said in a statement.
Greece has not received the remaining funds in its 240-billion-euro European Union-IMF rescue package as Brussels has demanded to first approve Greece's revised reform plan.
Ms Lagarde encouraged Athens to continue talks in Brussels - which she said would resume on Monday -and to "conduct the necessary due diligence in Athens."
"The Fund remains committed to work together with the authorities to help Greece return to a sustainable path of growth and employment," Ms Lagarde added.
AFP

Abbas threatens to turn to ICC over frozen tax monies

Abbas threatens to turn to ICC over frozen tax monies

[RAMALLAH] Palestinian president Mahmud Abbas threatened on Sunday to turn to the International Criminal Court over Israel's refusal to fully release hundreds of millions of dollars in tax monies owed to the Palestinian Authority.
In early January, Israel froze the monthly transfer of funds it collects on behalf of the PA as a punitive measure after the Palestinians moved to join the ICC.
But on Friday, Israel agreed to release the funds after deducting debts due for electricity, water and medical services.
Speaking Sunday, Abbas confirmed that two thirds of the money had been transferred.
"They said they were going to send the money and in the end they did, but a third of it was deducted - why?" he asked during a speech in the West Bank city of Ramallah.
"Now we have a new file to take to the ICC, first there was the (summer) war in Gaza, then there was the settlements and now the Palestinian leadership is considering presenting this issue to the court in due time." The Palestinians would not accept anything but the full amount, he said.
"We will not take the money until we get all of it: either you give us the full amount or we go to the ICC."
When the announcement was made on Friday, Israel did not say how much money would be transferred nor whether it would resume the normal monthly payment of around US$127 million in customs duties.
The move comes after heavy international pressure on Israel to release the monthly funds, which account for two-thirds of the Palestinians' annual budget, excluding foreign aid.
A source close to Israeli Prime Minister Benjamin Netanyahu told AFP Sunday that "a portion of the money" had indeed been transferred to the Palestinian Authority.
The source added that Israel had "assured the United States today that the remaining amount can be transferred at any moment".
Under an economic agreement between the sides signed in 1994, Israel transfers to the PA tens of millions of dollars each month in customs duties levied on goods destined for Palestinian markets that transit through Israeli ports.
Although the sanction has been imposed many times, it has rarely lasted more than one or two months, except in 2006 when Hamas won a landslide victory in Palestinian legislative elections and Israel froze the funds for six months.
Blocking the money also prevents the PA paying its roughly 180,000 employees, which costs almost US$200 million a month.
AFP

Netanyahu blasts Iran nuclear deal

Netanyahu blasts Iran nuclear deal


[WASHINGTON] Israeli Prime Minister Benjamin Netanyahu on Sunday again denounced the agreement between Tehran and world powers as a "bad deal" that "endangers" Israel and will leave Iran with a large nuclear infrastructure.
An outline deal agreed in Switzerland on Thursday paves the way for Tehran to curtail its nuclear activity in exchange for relief from punishing economic sanctions.
"It doesn't roll back Iran's nuclear programme," Mr Netanyahu told CNN, one of several US networks he appeared on to slam the deal Sunday.
"It keeps a vast nuclear infrastructure in place. Not a single centrifuge is destroyed. Not a single nuclear facility is shut down, including the underground facilities that they built illicitly. Thousands of centrifuges will keep spinning enriching uranium. That's a bad deal."


Israel's government reacted angrily to the historic agreement, which aims for a June 30 deadline for a final deal, with Mr Netanyahu demanding that Iranian recognition of the Jewish state's right to exist be written into the agreement.
"If a country that vows to annihilate us and is working every day with conventional means and unconventional means to achieve that end, if that country has a deal that paves its way to nuclear weapons, many nuclear weapons, it endangers our survival," the prime minister said.
"I'll tell you what else will happen," he added. "I think it will also spark an arms race with the Sunni states," a reference to Gulf monarchies.
Saudi Arabia fears that if too much of Iran's nuclear program is left intact, it will still have the ability to obtain an atomic bomb, and there are concerns that Riyadh could seek its own nuclear capability.
Iran and Saudi Arabia, the foremost Shi'ite and Sunni Muslim powers in the Middle East, have had troubled relations in recent years after taking different sides in the Syrian civil war.
'TERROR MACHINE'
Mr Netanyahu told ABC News that the money that will flow back into Iran as sanctions ease will not be used to help the population.
"It lifts the sanctions on them fairly quickly and enables them to get billions of dollars into their coffers," he said.
"They're not going to use it for schools or hospitals or roads... they're going to use it to pump up their terror machine worldwide and their military machine that is busy conquering the Middle East now."
Relations between Israel and its traditionally staunch US ally are at a low and were hugely damaged when Mr Netanyahu took the unprecedented step of addressing Congress last month to attack the nuclear negotiations with Iran.
When asked if he trusts President Barack Obama, Mr Netanyahu replied: "I trust that the president is doing what he thinks is good for the United States, but I think that we can have a legitimate difference of opinion on this because I think Iran has shown to be completely distrustful."
One part of the complex deal would see Iran slash by more than two-thirds the number of uranium centrifuges - which can make fuel for nuclear power but also the core of a nuclear bomb - to 6,104 from around 19,000 for 10 years.
California Democratic Senator Dianne Feinstein, also speaking on CNN, said Mr Netanyahu's comments could "backfire on him." "I wish that he would contain himself because he has put out no real alternative," Ms Feinstein said.
Ben Rhodes, the US deputy national security adviser for strategic communications, said Netanyahu was wrong because no deal could be reached that involved Iran dismantling its nuclear programme.
"Obviously that's the preferable solution," Mr Rhodes told CNN. "But the fact is Iran was never going to agree to a deal in which they got rid of their entire nuclear infrastructure.
Republican Senator Bob Corker, the chairman of the United States Senate Committee on Foreign Relations, said it was too early to judge the deal.
"There's a lot of water that needs to go under the bridge here. Many, many details are unknown at this point," Mr Corker told Fox News.
"I don't know how anyone could really ascertain whether this is something good or bad yet for the American citizenry."
AFP

Once over US$12t, the world's reserves are now shrinking

Once over US$12t, the world's reserves are now shrinking


[NEW YORK] The decade-long surge in foreign-currency reserves held by the world's central banks is coming to an end.
Global reserves declined to US$11.6 trillion in March from a record US$12.03 trillion in August 2014, halting a five-fold increase that began in 2004, according to data compiled by Bloomberg. While the drop may be overstated because the strengthening dollar reduced the value of other reserve currencies such as the euro, it still underlines a shift after central banks - with most of them located in developing nations like China and Russia - added an average US$824 billion to reserves each year over past the decade.
Beyond being emblematic of the dollar's return to its role as the world's undisputed dominant currency, the drop in reserves has several potential implications for global markets. It could make it harder for emerging-market countries to boost their money supply and shore up faltering economic growth; it could add to declines in the euro; and it could damp demand for US Treasury bonds.
"It's a big challenge for emerging markets," Stephen Jen, a former International Monetary Fund economist who's co-founder of SLJ Macro Partners LLP in London, said by phone. They "now need more stimulus. The seed has been sowed for future volatility," he said.


Stripping out the effect from foreign-exchange fluctuations, Credit Suisse Group AG estimates that developing countries, which hold about two-thirds of global reserves, spent a net US$54 billion of this stash in the fourth quarter, the most since the global financial crisis in 2008.
China, the world's largest reserve holder, together with commodity producers contributed to most of the declines, as central banks sold dollars to offset capital outflows and shore up their currencies. A Bloomberg gauge of emerging-market currencies has lost 15 per cent against the dollar over the past year.
China cut its stockpile to US$3.8 trillion in December from a peak of US$4 trillion in June, central bank data show. Russia's supply tumbled 25 per cent over the past year to US$361 billion in March, while Saudi Arabia, the third-largest holder after China and Japan, has burned through US$10 billion in reserves since August to US$721 billion.
The trend is likely to continue as oil prices stay low and growth in emerging markets remains weak, reducing the dollar inflows that central banks used to build reserves, according to Deutsche Bank AG.
Such a development is detrimental to the euro, which had benefited from purchases in recent years by central banks seeking to diversify their reserves, according to George Saravelos, co-head of foreign-exchange research at Deutsche Bank.
The euro's share of global reserves dropped to 22 per cent in 2014, the lowest since 2002, while the dollar's rose to a five-year high of 63 per cent, the International Monetary Fund reported on March 31.
"The Middle East and China stand out as two regions that are likely to face ongoing pressures to run down reserves over the next few years," Saravelos wrote in a note. The central banks there "need to sell euros," he said.
The euro has declined against 29 of 31 major currencies this year as the European Central Bank stepped up monetary stimulus to avert deflation. The currency tumbled to a 12-year low of $1.0458 on March 16, before rebounding to $1.0969 on April 3.
Central banks in emerging nations started to build up reserves in the wake of the Asian financial crisis in the late 1990s to safeguard their markets for periods when access to foreign capital dries up. They also bought dollars to limit appreciation in their own exchange rates, quadrupling reserves from 2003 and boosting their holdings of US Treasuries to US$4.1 trillion from US$934 billion, data compiled by Bloomberg show.
The reserve accumulation adds money supply to the financial system - each dollar purchase creates a corresponding amount of new local currency - and helps stimulate the economy. Annual monetary base in China and Russia grew at an average 17 per cent in the decade through 2013, data compiled by Bloomberg show. The expansion rate tumbled to 6 per cent last year.
While central banks have other ways of pumping cash into the banking system, such moves without the backing of increased foreign reserves could end up weakening their currencies further - an outcome they may want to avoid.
"The swing in global foreign exchange reserves is one key measure of the global liquidity tap being turned on and off," Albert Edwards, a global strategist at Societe Generale SA, wrote in a note on March 6. "When a regime of loose money suddenly ends," emerging-market asset prices "are usually one of the first casualties," he said.
BLOOMBERG

728 X 90

336 x 280

300 X 250

320 X 100

300 X600