Global News June 22, 2018

  1. BBC
  2. Global News June 22, 2018

“OPEC+ Will Boost Oil Output After Saudis Secure a Deal With Iran.”

OPEC and allies including Russia will boost oil production starting next month, offering relief to consumers after Saudi Arabia secured a last-minute deal to overcome Iran’s veto threat.
“We have an agreement” for a “nominal” production increase of 1 million barrels a day, Saudi Energy Minister Khalid Al-Falih told reporters in Vienna. In reality, the accord will add about 700,000 barrels a day of oil to the market in the second half of the year because several members are unable to increase their output, said Nigeria’s Oil Minister Emmanuel Ibe Kachikwu.
However, the final communique from the group’s meeting in Vienna left many unanswered questions about how the oil will flow to consumers. The document didn’t mention the production hike cited by Al-Falih, instead pledging that the group would focus on rolling back the deeper-than-intended cuts from nations such as Venezuela, returning their curbs to the level originally agreed in 2016.
OPEC and its allies exceeded their pledged 1.8 million barrel-a-day production cut by 47 percent last month, according to Russian Energy Minister Alexander Novak. That’s about 850,000 barrels a day of additional supply losses that have been largely unintentional, reflecting the collapse in Venezuela’s oil industry and long-term declines in Mexican output.
The accord achieves that, while also serving the needs of consumers. It salvages an agreement that was very much in doubt on Thursday evening after Iranian Oil Minister Bijan Namdar Zanganeh walked out of a meeting with fellow ministers, predicting nobody could persuade him to back an increase.
Iran has bridled at Trump’s intervention into the cartel’s policy since oil prices touched $80 a barrel last month. Zanganeh has said the U.S. president is to blame for high prices because of his unilateral withdrawal from the international nuclear agreement and the imposition of fresh sanctions that could significantly curb Iran’s crude exports.


“Trade tremors set stocks up for worst week in three months.”

World shares rose on Friday but were set to end in the red for a second week running amid intensifying worries over the fallout of a trade dispute resulting from U.S. tariffs, while oil prices rose with an OPEC meeting underway.
The MSCI All-Country World index .MIWD00000PUS, which tracks stocks in 47 countries, was up 0.3 percent by afternoon in Europe but down 1.3 percent on the week, its worst weekly performance since the week ended March 23. Futures indicated a recovery on Wall Street after a sharp drawdown the previous day.
Investor nervousness over a possible full-blown trade war has deepened this week over increasingly sharp rhetoric between the United States and China, and growing evidence of the economic damage such a conflict could produce.
Strong financial stocks and better-than-expected euro zone purchasing managers index for services helped drive a timid relief bounce in European shares. But the pan-European STOXX 600 and its euro zone counterpart .STOXXE were set for their biggest weekly loss in three months as the consequences of rising protectionism sank in, notably for the autos sector.


BBC News
“Venezuela crisis: UN says security forces killed hundreds.”

Venezuelan security forces have carried out hundreds of arbitrary killings under the guise of fighting crime, the UN says in a new report. The UN’s human rights body says it has credible accounts of security forces raiding poor neighbourhoods and killing young men, often in their homes.
The rule of law was «virtually absent» in the country, UN human rights chief Zeid Ra’ad Al Hussein said. Venezuela has in the past dismissed human rights allegations as «lies». The country is going through a protracted political and economic crisis. Scores of protesters were killed in clashes during anti-government protests last year and the country is also experiencing hyperinflation and food shortages.
The UN says the alleged extra-judicial killings were carried out by officers involved with the Operations for the Liberation of the People, ostensibly a crime reduction initiative. These officers may have killed more than 500 people between July 2015 and March 2017 as a way to showcase crime reduction results, the UN says. They are alleged to have staged evidence to make it look like the victims died in an exchange of fire. The officers involved have immunity from prosecution and no one has been held accountable.
UN investigators have been denied access to Venezuela – a current member of the UN Human Rights Council – and made their findings from interviews with witnesses and victims. Some of the other evidence comes from former attorney general Luisa Ortega. She was fired by Mr Maduro last year and went into exile.


“ECB Paper Tells Governments It’s Their Turn to Sustain Growth.”

The European Central Bank is trying once again to hammer home a message it’s been stressing for almost two decades: countries must reform their labor and product markets and use their fiscal space if they want their economies to remain resilient in the long term.
That’s the view in a paper published by the ECB on Friday. While the central bank says the report doesn’t necessarily reflect its own stance, the commentary echoes calls by policy makers that are gaining urgency as years of unprecedented stimulus start to draw to a close. If they go unheard, the risk is that central banks won’t have much room to act during the next downturn — or create new problems through an extensive use of unconventional tools.
The paper shows that the natural real rate of interest — the level at which borrowing costs neither cause overheating nor slow demand — has plummeted since the financial crisis started in 2008, reinforcing a systemic slide fed by demographic shifts and an imbalance between savings and investment.
“The degree to which structural reforms and technological advances can reverse the downward trend of the natural rate will be among the factors determining how challenging it is for central banks to reach their objectives in the future,” the paper said. “A low natural real rate increases the likelihood that policy rates need to turn negative or that non-standard measures need to be taken in response to adverse shocks. While unconventional policies have proven to be effective, some of them have also been met with some concerns, because of potential longer-term adverse side-effects.”