Oil, Gas, And Fracking News Reads 14July, 2019 – Part 2

Written by rjs, MarketWatch 666

Here are some more selected news articles about the oil and gas industry from the week ended 14 July 2019. Go here for Part 1.

This is a feature at Global Economic Intersection every Monday evening.

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Nigeria oil pipeline fire in Lagos kills two after vandalism – Two people died after a gasoline pipeline owned by Nigeria’s state oil company exploded in an area of Lagos, the commercial capital, the National Emergency Management Agency said.The fire, which began in the early hours of Thursday, was later contained and extinguished while the pipeline was closed for repairs, the Nigerian National Petroleum Corp. spokesman Ndu Ughamadu said by phone from Abuja, the capital.As many as 30 vehicles were burnt, Lagos-based Punch newspaper said, citing the emergency team.

Shell under fire over effect of Bonga oil spill on 170,000 fishermen –The Royal Dutch Shell has come under criticism as a group, Oil Spill Victims Vanguard, OSPIVV, on Thursday said over 170,000 fisher-persons, as well as 350 communities along the coastlines between Bayelsa and Delta States, were negatively impacted by the 2011 Bonga oil spill in Nigeria. OSPIVV Executive Director, Harrison Jalla made the assertion at a press conference held in Effurun, Uvwie Local Government Area, disclosing that the communities were impacted when Royal Dutch Shell and its subsidiaries (Shell International Trading and Shipping Company, SNEPCO) out of alleged gross negligence in their Bonga Field operations discharged over 40,000 barrels of crude oil into the Atlantic Ocean. “The pollution from the discharge which covered a distance of over 185 kilometres along the Nigeria Coastline compelled Fisher persons to desert the sea, polluted farmlands, vegetation and contaminated the environment in Ekeremo, Southern Ijaw and Brass Local Government Areas of Bayelsa State. “While in Delta State, Warri South-West, Warri South, Warri North, BURUTU and some Riverine areas in Ondo.” Jalla however expressed confidence that he will be victorious in the suit he filed against Royal Dutch Shell and its subsidiaries (Shell International Trading and Shipping Company, SNEPCO). Jalla had dragged the Royal Dutch Shell and its subsidiaries since 21st September 2017 before an English Court through his lawyers, John&Steller Solicitors of Hanover Square Mayfair London. He is seeking for benefits of individual claimants and communities negatively impacted by the Bonga Spill by the Bonga Oil Spill of December 20th, 2017. Jalla is praying the English Court to compel Royal Dutch Shell and its subsidiaries to do the clean-up, rectification, restoration, compensation and damages occasioned by the negative impact of the December 20th, 2011 and having adduced our evidence, said, “We are sure of victory”.

KPC moves to investigate oil spill as encroachment bites – Kenya Pipeline Company (KPC) will outsource the services of a contractor to investigate the cause of the recent oil spill in Kiboko, Makueni county, the management has said, even as it remains concerned over encroachment on its land. Chairman John Ngumi on Tuesday told journalists in Nairobi the tendering process will commence “soon”, to find the suitable individuals for the audit of the new Mombasa-Nairobi pipeline. The 450km Mombasa-Nairobi Pipeline, operationalised in July last year, developed leakage problems barely a year after it began moving petroleum products from Mombasa to Nairobi, a move that has raised questions over the quality of work. Line 5, as it is commonly known, was developed by Lebanese-Zakhem Construction through a Sh48 billion tender. Oil spillage hit Kiboko natural springs along the new pipeline on March 30. According to Ngumi, KPC will commission two types of audits-a contractual audit and an inline audit, which will involve a technical aspect of testing the pipe from Mombasa all the way to Nairobi. “An instrument will be placed in the pipeline which will analyse the quality, corrosion and identify whether there is a leakage,” Ngumi said at the KPC headquarters, “This will determine whether we have what was meant to be delivered. As at the moment, we don’t know what happened.”

Penguins rescued in Algoa Bay oil spillage – South African National Parks marine rangers have managed to rescue four oiled penguins following this weekend’s oil spill off the Port of Nquga in Algoa Bay. This follows an incident that occured in the early hours of Saturday morning, where approximately 200 to 400 liters of fuel was spilled into the sea as a result of overflow during an oil transfer.SANParks spokesperson, Fayroush Ludick, says rangers had initially observed six penguins on St Croix but only managed to catch four, while two more were oil covered penguins were seen on Bird Island. She says four of the birds have since been handed over to the animal rescue and rehabilitation organization SANCOBB and that its a matter of waiting for favourable weather conditions to try and recover the other oiled birds. The Eastern Cape Manager of SANCOBB Stacey Webb – says there is the possibility that more birds were affected as the oil spill occurred while they were off Bird Island and St Croix Island feeding. She says they’ll be monitoring the Bay’s penguin population closely over the next few days. “Three of them have 90% of their bodies covered in very thick black oil. One of them is 75% covered. It depends on the amount of oil they have ingested. They are strong birds and we hope they will be OK,” Webb said.

Bunkering services oil spill in Port Elizabeth under investigation -The South African Maritime Safety Authority (SAMSA) over the weekend said that an investigation is underway to establish the cause of the oil spillage incident during a bunkering service off the port of Ngqhura near Port Elizabeth on Saturday morning. This follows confirmed reports of an oil spillage at sea while a trade vessel was being refuelled. It was reported that as much 200-400 litters of fuel spilt into the ocean. However, the bunkering services company involved, SA Marine Fuels, soon activated an oil spillage control exercise to contain its spread on water. A Department of Environmental, Forestry and Fisheries’ statement on Saturday said the vessel involved was the Liberia flag carrying trade ship known as the MV Chrysanthi S. The department said it had been “notified of an oil spill that took place in Algoa Bay in the early hours of Saturday. The incident took place at approximately 04h40 (in the) morning during offshore bunkering operations in Anchorage 1 of the Port of Nqura.“It was reported that approximately 200 to 400 litters of fuel from the receiving vessel MV Chrysanthi S, flag state Liberia, was spilled into the sea as a result of overflow during the fuel transfer. SA Marine Fuels proceeded to dispatch a commercial oil spill response service provider to mitigate and contain the spread of the spill.“This incident is currently considered a Tier 1 level incident which does not require intervention from the national authorities as local resources are sufficient. The department will provide assistance if the incident escalates and requires it.”

Refuelling under scrutiny as S.Africa penguins hit by oil spill – Rangers in wet suits have been searching for oil-tarred penguins in shallow water around St Croix Island off the South African coast as a refuelling spill highlights conservationists’ fears over pollution. Experts said an unknown number of penguins had been affected on the rocky, uninhabited island, which is home to the largest breeding colony of endangered African penguins in the world. A Liberian-flagged ship spewed between 200 and 400 litres of oil into the sea off Port Elizabeth city during “bunkering” re-fuelling — the process of filling a ship with fuel from another vessel. The small-scale leakage from the bulk carrier MV Chrysanthi vessel at dawn on Saturday was the second oil spill in the environmentally-sensitive area in three years. “This is exactly the concern with offshore ‘bunkering’ that we have been voicing concerns about,” Stacey Webb, of the Southern African Foundation for the Conservation of Coastal Birds (SANCCOB) charity, told AFP. “The danger is not over yet. Penguins forage up to 100 kilometres (60 miles) away from the islands (St Croix Island and Bird Island) so they could run into the spill out at sea.” About 20 penguins covered in black sludge have been rescued by national parks rangers so far. The weekend spill follows one in August 2016 when about 100 birds were affected by a smaller “bunkering” spill. “Bunkering” only started in Ngqura port, part of Algoa Bay, in 2016, with the shipping industry promoting it as an economic boost for the area. Plans to develop the bay into a major re-fuelling hub for international vessels have generated widespread controversy, with conservationists and the tourism sector saying the risk of pollution is too high.

MV Takana spills oil – Reports and pictures supplied to the Solomon Star alleged the oil spill from the abandoned vessel that sunk last month at Star Harbour is now spilling hazardous oil to the environment. Some pictures provided shows coral reefs covered with brownish colour of thick oil leakage from the vessel. Director of Solomon Islands Maritime Authority (SIMA) Jonah Mitau told the Solomon Star earlier that they will investigate the wreck and see if any danger associated with the environment. But yesterday Mitau told the Solomon Star that SIMA is yet to visit MV Takana due to commitment on Rennell oil spill disaster. He said their officers are yet to complete a full report on the Rennell oil spill, therefore would not able to investigate MV Takana. He said hopefully they would able to complete their report on Rennell next week and may have time to visit MV Takana, if the oil spill there truly occurs. The constituency vessel was left abandoned by out going Member of Parliament (MP) for East Makira Alfred Ghiro and remain floating there until it drifted and overturned in the coastal waters.

China refiners curb fuel output after massive new plants stoke glut (Reuters) – China’s fuel producers are making extended curbs to their output in the third quarter after supply from mammoth new refineries stoked an already-sizeable glut, potentially dragging on crude oil demand from the world’s biggest importer of the commodity. Private refiner Hengli Petrochemical (600346.SS) ramped up its 400,000-barrels per day (bpd) plant in northeast China to full capacity in May, while Zhejiang Petrochemical began trial runs around the same time at a similar-sized refinery on the east coast. In the wake of that wave of fresh supply and amid slowing local demand for fuels such as gasoline and diesel, refiners are cutting their crude processing, or throughput, industry sources and analysts said. That drop should sap their appetite for crude imports, pulling down on international oil prices LCOc1 that have already been hit by fears over a slowing global economy. The swollen surplus of fuel products could also send China’s fuel exports surging to new highs and further pinch Asian refining profits. “For markets that are already consumed with fears about a global recession … headline numbers of oil demand growth slowing alongside talk of run cuts seem to reinforce a bearish narrative,”

Hedge funds sell crude as economy fears trump OPEC cuts Hedge (Reuters) – Hedge funds sold more Brent futures and options last week as concerns about the global economy trumped the decision by the Organization of the Petroleum Exporting Countries (OPEC) and its allies to extend output cuts. Hedge funds and other money managers sold another 7 million barrels of Brent derivatives in the week to July 2, according to position data published by ICE Futures Europe. Portfolio managers have now sold a total of 158 million barrels over the last eight weeks, after previously buying 270 million barrels since Dec. 4 (https://tmsnrt.rs/2YBIwxa). Funds hold a net long or bullish position of just 248 million barrels, which is relatively low compared with the average of 359 million over the last four years. For the moment, the slowdown in global manufacturing and trade, and the associated hit to oil consumption, is upstaging OPEC’s decision to extend production limits for an extra 9 months until March 2020. In contrast, fund managers are becoming slightly less bearish towards middle distillates such as European gasoil, which had previously been hardest hit by slowdown fears. Funds were net buyers of 5 million barrels of gasoil futures and options contracts last week, after buying 3 million the week before, signalling the recent distillate liquidation cycle may be over.

Brent Short-Selling at 5-Month High – Hedge funds are growing more pessimistic about oil prices as sentiment on the global economy sours. Money managers pushed bets on a decline in Brent crude prices to the highest since mid-January in the week ended July 2, according to data released Friday. It was another sign of waning faith in a week that saw prices drop amid a host of sluggish reports on global manufacturing. That overshadowed a deal by OPEC and its allies to extend supply cuts. Short-selling bets on Brent climbed by 1.5%, according to the ICE Futures Europe exchange. The net-long position — the difference between wagers on a price increase and those on a decline — fell 2.7% to 248,006 options and futures contracts, the least bullish since February. The release of data on West Texas Intermediate crude positions was postponed until Monday, due to the July Fourth holiday in the U.S.

Oil prices tread water as market eyes global risks – Crude prices were little changed on Monday as traders weighed geopolitical risks against the impact of the Sino-U.S. trade war on the global economy, although last week’s better-than-expected U.S. jobs data offered some support. Brent crude futures were down 3 cents by 0300 GMT at $64.20. U.S. West Texas Intermediate (WTI) was up 6 cents at $57.57 a barrel. “Traders remain incredibly cautious about the dimmer global economic overhang.” Both oil benchmarks fell last week as concerns about a slowing global economy outweighed risks to supply. Brent fell more than 3% and WTI shed more than 1.5%. U.S. job growth rebounded strongly in June, with government payrolls surging, the Labor Department’s closely watched employment report showed on Friday, suggesting May’s sharp slowdown in hiring was probably a one-off. Employers added 224,000 jobs last month, the most in five months, the report showed. But the U.S.-China trade war has dampened prospects of global economic growth and oil demand. The lack of concrete progress in resolving the acrimonious trade war between the United States and China, however, means the bar could be very high for the U.S. Federal Reserve not to lower borrowing costs at its July 30-31 policy meeting. White House Economic advisor Larry Kudlow has confirmed top representatives from the United States and China will meet in the coming week to continue trade talks. Still, Japan’s core machinery orders fell for the first time in four months in May, posing the biggest monthly drop in eight months in a worrying sign that global trade tensions are taking a toll on corporate investment. Oil received some support from simmering tensions over Iran and after an extension last week to output cuts by OPEC and its allies. Iran said on Sunday it will shortly boost its uranium enrichment above a cap set by a landmark 2015 nuclear deal, prompting a warning ‘to be careful’ from U.S. President Donald Trump, who pulled out of the pact last year.

Oil Prices Edge Up In Cautious Trade – Oil prices rose on Monday, although the upside remained capped by renewed concerns about a slowing global economy. Benchmark Brent crude edged up 0.25 percent to $64.38 a barrel while U.S. West Texas Intermediate (WTI) futures were up 0.1 percent at $57.55 a barrel. Prices remain somewhat supported by robust U.S. jobs report released last week and a flare up in geopolitical tensions. The latest jobs report showed that U.S. employment surged up by 224,000 jobs in June, the most in five months, after a gain of 72,000 jobs in May. Economists had expected employment to increase by about 160,000 jobs. Geopolitics continue to remain in focus after Iran said on Sunday it would boost its uranium enrichment, in breach of a cap set by a landmark 2015 nuclear deal. The announcement prompted a warning ‘to be careful’ from U.S. President Donald Trump, who pulled out of the pact last year. On the flip side, the lack of concrete progress in resolving the acrimonious trade war between the United States and China has dampened prospects of global economic growth and oil demand. As top U.S. and Chinese officials organize a resumption of talks for this week to try to resolve a year-long trade war, Chinese Vice President Wang Qishan warned against “protectionism in the name of national security”, and called major powers to make more contributions to global peace and stability.

U.S. oil prices end higher as threat of Washington-Tehran conflict grows – Oil futures diverged Monday, with U.S. prices up a third straight session while global benchmark Brent finished lower, as tensions with Iran, and the possibility of disruptions to oil flow in the Middle East, increased. Concerns surrounding energy demand, however, lingered. Geopolitical tensions with Iran have heated up, while oil demand expectations seem to be coming down, said Phil Flynn, senior market analyst at Price Futures Group. August West Texas Intermediate crude edged up by 15 cents, or 0.3%, to settle at $57.66 a barrel on the New York Mercantile Exchange, posting a gain for a third consecutive session. The contract lost 1.6% for last week, according to Dow Jones Market data. International benchmark September Brent lost 12 cents, or 0.2%, to $64.11 a barrel on ICE Futures Europe. Brent declined 0.8% for last week.Iran is claiming that it is enriching uranium above the levels agreed to in the Iran nuclear deal, said Flynn, in daily commentary. “They are also threatening retaliation for the U.K. taking an Iranian oil tanker [last week]. They have threatened to seize U.K. ships and turn the Persian Gulf into a sea of blood.” Iran’s Foreign Ministry spokesman Abbas Mousavi called the seizure of the Iranian supertanker “piracy,” but stopped short of suggesting Iran take actions against ships transiting through the Strait of Hormuz, the Associated Press reported Monday. The Strait is the world’s most sensitive oil-transportation choke point. “Iran’s violation of the [nuclear] agreement could now prompt Europe to impose sanctions on Iran, too. For example, the EU could impose an oil embargo on Iran, as it did between 2012 and 2015,” said Carsten Fritsch, energy analyst with Commerzbank. “This would have no direct impact on Iranian oil exports as Europeans have in any case not bought any Iranian oil since the end of 2018 because of the U.S. sanctions; this is presumably one reason for Iran’s dissatisfaction and for the aforementioned ultimatum.”

Persian Gulf Conflict Could Send Oil Beyond $325 — If attacked by U.S. and allied forces, or if it believes an attack is imminent, Tehran may choose to launch airstrikes and missiles on American military forces and regional allies such as Saudi Arabia and the UAE while it still has the capability to do so. This ‘use them before you lose them’ strategy would largely be based on Saddam Hussein’s experience in Iraq. The impact of a closure of the Strait of Hormuz on global crude prices obviously depends on the amount of oil kept off the world market on a daily basis and the duration of the disruption. Based on the discussion in the previous section, we explore two scenarios that relate directly to the Strait of Hormuz, and a third one that includes a Persian Gulf War. In the Optimistic Scenario, where the Strait of Hormuz is only closed to commercial traffic for a few days, the impact on global oil supplies would be relatively minimal, but we would still see a brief spike above $100 per barrel due to the initial uncertainty surrounding its outcome. Crude prices would then quickly fall back to pre-crisis levels. The flow of 20.7 million b/d of crude and petroleum product would be curtailed if the Strait of Hormuz is fully closed, but this would be mitigated by almost 4 million b/d of crude being shipped on currently spare pipeline capacity across Saudi Arabia to Red Sea export facilities and the Abu Dhabi Crude Oil Pipeline bypassing the Strait of Hormuz. Under the Pessimistic Scenario, the world’s oil emergency response system would be taxed to its maximum in the first two months of the crisis – assuming the Strait of Hormuz is fully closed for the first 45 days, and a straight line resumption in oil tanker traffic over the next 45 days – leading to historically high crude oil prices on an inflation-adjusted basis for an extended period. Global strategic oil reserves would be more than enough to cover the shortfall in an overall sense, with 40 percent of the 1.9-billion-barrel total remaining post-crisis, but the rate of daily withdrawal from strategic reserves would pose a challenge. Previous studies suggest that a maximum of 14.4 million b/d of crude and product could be released from the International Energy Agency (IEA) member country reserves in the first month and roughly 12.5 million b/d in the second month, compared to disruptions of 16.9 million b/d and 15.5 million b/d, respectively, based on our assumptions. Finally, in a Doomsday Scenario, where there is significant damage to Persian Gulf oil-producing and export infrastructure as well as a three-month closure of the Strait of Hormuz, crude oil prices would rocket into the stratosphere. They would not begin to fall back until the global economy collapses into deep recession. A direct hit on Saudi Aramco’s Abqaiq oil processing facility alone could deprive the world market of 7 million b/d for a year or more as the plant is repaired.The impact of this and other Persian Gulf production losses could be mitigated somewhat by the remaining 40 percent of the world’s strategic reserves, as well as 200 million b/d of crude that Saudi Arabia holds in reserve at home assuming Saudi export facilities remain relatively intact.

Oil rises towards $65 as supply concerns outweigh trade disputes – Oil rose towards $65 a barrel on Tuesday as OPEC supply cuts and Middle East tensions outweighed the U.S.-China trade dispute that has been dragging down the global economy and oil demand. OPEC and its allies led by Russia agreed last week to extend their supply-cutting deal until March 2020. Brent has risen almost 20% in 2019 supported by the pact and also tensions in the Middle East, especially concerns about the row over Iran’s nuclear program. Brent crude, the global benchmark, rose 33 cents to $64.44 a barrel. U.S. West Texas Intermediate crude was up 26 cents to $57.92. “OPEC and its allies are doing their best to support the market,” said Tamas Varga, an analyst with PVM. “Oil prices are to hold up reasonably well during coming months or at least they are not to fall out of bed.” Rising tensions between Iran and the United States have brought the two countries close to conflict. Last month, President Donald Trump called off air strikes at the last minute in retaliation for Iran shooting down a U.S. drone. The European Union on Tuesday urged Iran to reverse its scaled up uranium enrichment that breaches a nuclear deal it agreed in 2015 with world powers. Washington withdrew from the accord last year and re-imposed sanctions. Oil also gained support from reports expected to show a drop in U.S. crude inventories.

Middle East Tension Boosts Oil Prices – Oil prices edged up at the start of the week due to the OPEC+ cuts and rising U.S.-Iran tension. Trade and economic concerns continue to keep prices in check, however. Iran said that it exceeded the 3.67 percent uranium enrichment level laid out in the 2015 nuclear deal, and in recent days exceeded 4.5 percent. Iran said that it would continue to pull out of parts of the accord on an ongoing basis until Europe delivers on some of the benefits laid out in the accord. The decision will increase tension with the U.S. and put pressure on Europe to carry out its promises to Iran. But it may also push Europe away and it increases the odds of punitive action from the EU.Russian oil production fell to athree-year low at the start of July, the result of lingering effects from the pipeline contamination crisis. “The Russian story definitely supports prices today. Market participants remain concerned that Russian compliance could deteriorate again, and lower Russian output together with elevated compliance from OPEC nations should rebalance the oil market faster,” said Giovanni Staunovo, oil analyst for UBS, according to Reuters.China’s refiners are cutting runs after a wave of new refineries came online and created a glut of supply. Tepid demand is also exacerbating a fuel surplus. As a result, China’s oil imports could stagnate, a negative for the global oil market. “For markets that are already consumed with fears about a global recession … headline numbers of oil demand growth slowing alongside talk of run cuts seem to reinforce a bearish narrative,” said Michal Meidan, a London-based analyst at Energy Aspects, according to Reuters. In a move that angered both sides of the ethanol versus oil refining battle, the EPAproposed higher blending requirements for refiners in 2020, but declined to scrap previously issued waivers. The Trump administration more than quadrupled the volume of waivers issued to refiners, roiling the market for ethanol and for credits that can be bought and sold by refiners. Iran said that the seizure of its ship in Gibraltar by the UK won’t go “unanswered.” BP reportedly rerouted one of its tankers heading for Iraq to Saudi waters over fears of retaliation. Despite an economic and political crisis and crippling sanctions, Chevron has not pulled out from Venezuela, even as most other international companies have already done so. Chevron received a waiver from the U.S. government to continue operating, and the company expects to profit from production if Maduro stays in power, or be first in line to a potential historic privatization if opposition forces take over.

U.S. oil prices tally a fourth straight session gain – Oil futures gained on Tuesday, with U.S. prices logging a fourth straight session gain, buoyed by tensions with Iran that threaten the global flow of oil and by expectations for a weekly decline in U.S. crude supplies. Concerns over a slowdown in energy demand, however, have kept prices in check. Traders also awaited Congressional testimony this week from Federal Reserve Chairman Jerome Powell and any hints on the likelihood of an interest-rate cut later this month. August West Texas Intermediate crude rose 17 cents, or 0.3%, to settle at $57.83 a barrel on the New York Mercantile Exchange, following three straight session of gains. The settlement was the highest for a front-month contract since July 1, FactSet data show. International benchmark September Brent, which had diverged from its U.S. counterpart a day earlier, climbed 5 cents, or nearly 0.1%, to $64.16 a barrel on ICE Futures Europe. Rising tensions between Iran and the United States have brought the two countries close to conflict and threatened the security of major oil transportation choke point, the Strait of Hormuz. Last month, President Donald Trump called off air strikes at the last minute in retaliation for Iran shooting down a U.S. drone. The European Union on Tuesday urged Iran to reverse its scaled-up uranium enrichment that breaches a nuclear deal it agreed in 2015, Reuters reported. The Trump administration withdrew from the accord last year and imposed oil-focused economic sanctions. “Geopolitics, and more specifically the threat of more military activity between the U.S. and Iran, is one of the only remaining bullish factors supporting the energy market right now, as the supply fundamentals are roughly balanced between an extension in OPEC+ policy but stubbornly elevated U.S. output,”

WTI Spikes After Huge Crude Draw – Oil prices gained modestly on the day, with WTI rallying up to $58 ahead of tonight’s API inventory data, despite another tanker being seized (by Egypt this time).“Given the continued presence of sanctions and tensions between the U.S. and Iran, the ongoing trade war between the U.S. and China, and the potential for an economic slowdown, oil prices are likely to remain volatile in the short term,” said Michael Laitkep, an analyst at Alerian, which tracks energy infrastructure companies.But for tonight, and tomorrow morning, all eyes are on the fundamental side… API

• Crude -8.129mm (-2.5mm exp)
• Cushing -754k
• Gasoline -257k
• Distillates +3.690mm

Crude inventories were expected to drop in the last week (after 3 previous weeks of draws) but the huge 8.1mm crude draw was a big surprise (everyone is ignoring the distillates build for now)… WTI hovered around $58.00 ahead of the print, and exploded higher (above $59) on the huge draw…

Oil rises more than 1% after US stockpile drop – Oil prices rose on Wednesday, led by U.S. crude after an industry group reported that U.S. stockpiles fell for a fourth week in a row, alleviating concerns about oversupply amid global trade tensions. West Texas Intermediate (WTI) crude had climbed 81 cents, or 1.4%, to $58.64 by 0151 GMT. Brent was up 61 cents, or 1%, at $64.77, having earlier hit $64.95. The U.S. and global benchmarks have gained this year as the Organization of the Petroleum Exporting Countries (OPEC) and big producers such as Russia have honored commitments to cut output. Investors have also been on the lookout for any signs that unrelenting production from the United States is being consumed. U.S. crude stockpiles fell more than forecast last week, while gasoline inventories decreased and distillate stocks built, data from industry group the American Petroleum Institute (API) showed on Tuesday. Crude inventories fell by 8.1 million barrels in the week to July 5 to 461.4 million, compared with analyst expectations for a decrease of 3.1 million barrels, according to the data. Official figures from the government’s Energy Information Administration (EIA) are due later on Wednesday. “Prices are finely balanced right now as investors await fresh stimulus,” said Fawad Razaqzada, technical analyst at FOREX.com. “The stimulus could come in the form of a sharp change in U.S. crude oil inventories.” Oil prices have been under pressure from concerns about global economic growth amid growing signs of harm from the U.S.-China trade war that has rumbled on over the last year. Lower economic growth typically means reduced demand for commodities such as oil.

WTI Fails To Extend Gains Despite Huge Crude Draw – Oil prices have extended their gains overnight after the much bigger than expected crude draw suggested by API, and helped by an uber-dovish Powell and a re-emergence of tensions with Iran (Trump threatening more sanctions imminently). “The crude draws reported by the API yesterday were much larger than the market was expecting,” said Warren Patterson, a senior commodities strategist at ING Bank NV. “That is the key catalyst behind the move higher.” DOE:

• Crude -9.50mm (-2.9mm exp)
• Cushing -310k
• Gasoline -1.46mm
• Distillates +3.729mm

After API, and the market’s surge, analysts shifted their expectation for a bigger crude draw than before, and rightly so as DOE reported a massive 9.50mm crude draw – the fourth weekly draw in a row. Gasoline also drew for the 4th week as distillate stocks rose. Production is perhaps rolling over but its a little too soon to tell yet (aside from the signaling from rig counts)… WTI traded around $59.50 ahead of the DOE data (having surge overnight), spiked on the big crude draw print before algos sold the news…

Oil prices jump 4.5% on U.S. crude stocks draw, Gulf of Mexico storm (Reuters) – Oil prices rose 4.5% a barrel on Wednesday to their highest level in more than a month after U.S. crude inventories shrank and as major producers cut nearly a third of offshore Gulf of Mexico production ahead of an expected storm. Brent crude futures LCOc1 settled at $67.01 a barrel, up $2.85, or 4.44 percent. U.S. West Texas Intermediate (WTI) crude futures CLc1 settled at $60.43 a barrel, climbing $2.60, or 4.50 percent. Both benchmarks hit their highest prices since late-May. U.S. crude stocks fell 9.5 million barrels in the week to July 5, shrinking more than triple the 3.1 million-barrel draw analysts had expected as refineries ramped up output, the Energy Information Administration (EIA) said. “The inventory draw was much stronger than expected,” which helped to push oil prices higher, said Carsten Fritsch, oil analyst at Commerzbank. “Imports dropped and refinery utilization reached the highest level since the beginning of the year, contributing to the big draw.” A storm expected to form along the Gulf of Mexico also helped oil prices. Major oil firms began evacuating and halting production in the Gulf of Mexico ahead of the storm, which is forecast to become a hurricane by the weekend. [nL2N24B0L0]

US oil hits highest in over a month amid Gulf of Mexico storm, Iran tensions – Oil futures hit a six-week high on Thursday as a storm built in the Gulf of Mexico, threatening crude output, while an incident with a British tanker in the Middle East highlighted ongoing tensions in the region. U.S. West Texas Intermediate (WTI) crude futures were up 34 cents, or 0.6%, at $60.77 a barrel by 0337 GMT, after earlier touching the highest since May 23 at $60.83. They gained 4.5% in the previous session. Brent crude futures reversed early losses and were up 30 cents, or 0.5%, at $67.31 a barrel, after rising to as high as $67.38, the highest since May 30. They ended Wednesday up 4.4%. Five boats believed to belong to Iranian Revolutionary Guards approached a British oil tanker on Wednesday and asked it to stop in Iranian waters close by, but withdrew after a British warship warned them over radio, a U.S. defense official said on Thursday. Tensions have been high in the Middle East after attacks on tankers and the downing of a U.S. drone by Iran last month, following President Donald Trump’s unilateral withdrawal from a multi-party agreement with Tehran to end its nuclear program. U.S. oil producers on Wednesday cut nearly a third of Gulf of Mexico crude output ahead of what could be one of the first major storms of the Atlantic hurricane season. Fifteen production platforms and four rigs were evacuated in the north central Gulf of Mexico, according to a U.S. regulator as oil firms moved workers to safety ahead of a storm expected to become a hurricane by Friday. Oil prices were also supported by a decline in U.S. inventories. U.S. crude stocks fell 9.5 million barrels in the week to July 5, the Energy Information Administration (EIA) said, more than triple the 3.1 million-barrel draw analysts had expected as refineries ramped up output.

Oil prices rise amid Gulf of Mexico storm, Middle East tensions – Oil prices rose on Friday, hovering near six-week highs, as U.S. oil producers in the Gulf of Mexico cut more than half their output in the face of a tropical storm and as tensions continued to simmer in the Middle East.Brent crude futures were up 29 cents, or 0.4%, at $66.81 per barrel by 0300 GMT. The international benchmark settled down 0.7% on Thursday after hitting its highest since May 30 at $67.52 a barrel. U.S. West Texas Intermediate (WTI) crude futures were up 31 cents, or 0.5%, at $60.51 a barrel. The U.S. benchmark marked its highest level since May 23 in the previous session at $60.94.By Thursday, oil companies in the Gulf of Mexico had cut more than 1 million barrels per day (bpd) of output, or 53% of the region’s production, due to Tropical Storm Barry which could make landfall Saturday on the Louisiana coast.The storm was forecast to become a category one hurricane with at least 74-mile-per hour (119 km-per-hour) winds.“Brent crude oil … extended its gains as storms in the Gulf of Mexico halted production of oil and U.S. oil inventories continued to recede more than expected,” ANZ Bank said in a note. U.S. crude oil inventories have decreased for four consecutive weeks. Crude stocks fell 9.5 million barrels in the week to July 5, the Energy Information Administration (EIA) said, a drop that was more than triple the 3.1 million-barrel draw expected by analysts.

Lower anticipated global economic growth reduces expectations for 2019 global oil demand – In its July 2019 edition of the Short-Term Energy Outlook(STEO), EIA forecasts that global liquid fuels consumption, which averaged 99.9 million barrels/day (b/d) in 2018, will grow by 1.1 million b/d in 2019 and by 1.4 million b/d in 2020. EIA has revised down its expectation for global liquids demand growth for six consecutive months. This revision reflects slower expected economic growth in many of the world’s largest oil-consuming countries, lower than expected oil consumption so far this year, and higher crude oil prices. One of the main drivers of EIA’s global oil consumption forecast is global gross domestic product (GDP) based on country-level forecasts from Oxford Economics. EIA calculates an oil-weighted GDP by using relative magnitudes of oil consumption in each country. EIA revised the 2019 oil-weighted GDP growth rate from 2.9% in its January STEO to 2.2% in its July STEO. If realized, this 2.2% growth rate would be the lowest annual growth rate since 2009 and one of the main reasons for slower growth in global liquids consumption.The July STEO forecast for 2019 also includes historical 2019 liquid fuels consumption data for the first quarter of the year for countries that are members of the Organization for Economic Cooperation and Development (OECD). Non-OECD consumption estimates were also updated to reflect new GDP data. Consumption during this period was less than forecast in the January STEO. EIA attributes lower than expected OECD oil consumption earlier this year to relatively warm weather in Europe in February and March, which reduced heating oil consumption; slowing GDP growth; and a slowdown in Europe’s manufacturing sector. Weather was also a likely cause for U.S. liquid fuels consumption in the second quarter of 2019 to be less than EIA had forecast at the beginning of the year. Initial estimates for May and June support the possibility that flooding in the Midwest affected the planting season for some farms. Because of the flooding, farmers likely reduced their consumption of diesel fuel for farming equipment. In addition, crude oil prices affect the price of refined fuel prices, and higher fuel prices, all other factors being equal, typically cause fuel consumption to decline.

Oil markets will see another glut in 2020, IEA predicts –The International Energy Agency (IEA) expects the return of an oversupplied oil market next year, despite the recent rollover of an OPEC-led pact designed to restrain any glut. The energy agency said the “main message” of its closely-watched report was that oil supply in the first six months of 2019 had exceeded demand by 0.9 million barrels per day. “This surplus adds to the huge stock builds seen in the second half of 2018 when oil production surged just as demand growth started to falter,” the Paris-based IEA said Friday. Neil Atkinson, head of the oil industry and markets division at the IEA, told CNBC on Friday that in addition to the remainder of this year, the outlook for 2020 is also for “considerable oversupply because we are getting big growth from the United States and some other countries.” “So, as far as the issue of re-balancing is concerned, as we say in the lead article in today’s report, re-balancing is still some way off,” Atkinson said. OPEC and its allies, led by Russia, have kept 1.2 million barrels per day off the market since the start of the year. The energy alliance, sometimes referred to as OPEC+, last week renewed the pact until March 2020 to avoid a build-up of inventories that could hit prices. “The widely-anticipated decision by OPEC+ ministers to extend their output agreement to March 2020 provides guidance but it does not change the fundamental outlook of an oversupplied market,” the IEA said. International benchmark Brent crude traded at around $66.99 Friday morning, up around 0.7%, while U.S. West Texas Intermediate (WTI) stood at $60.52, around 0.5% higher. Concerns that global demand is slowing caused Brent to decline by 10% in June, despite supportive geopolitical factors, the IEA said. The energy agency said Friday that it expects a 2.1 million barrels per day expansion of non-OPEC oil supply next year, largely driven by soaring U.S. production. That would mark a slight increase from 2 million barrels per day in 2019, lowering the requirement of OPEC crude.

Oil flat as tropical storm limits output, glut forecasts weigh – (Reuters) – Oil prices were little changed on Friday as U.S. Gulf of Mexico crude output dropped by more than half from disruptions caused by a tropical storm, but concerns over a global crude surplus in the months ahead limited gains. Brent crude LCOc1 futures settled at $66.72 a barrel, climbing 20 cents. U.S. West Texas Intermediate (WTI) crude CLc1 futures settled at $60.21 a barrel, up 1 cent. Brent has gained 4% this week while WTI posted a 4.7% rise. Both benchmarks fell last week. Tropical Storm Barry, which is expected to become a hurricane just before making landfall this weekend, boosted crude futures as oil companies in the Gulf of Mexico sliced production. Nearly 59%, or 1.1 million barrels per day, of crude oil production in the U.S.-regulated areas of the Gulf of Mexico has been cut because of the storm, the U.S. Bureau of Safety and Environmental Enforcement (BSEE) said. “The crude oil market is being supported by the Gulf of Mexico production shut-in. … It is going to look to see if Tropical Storm Barry becomes a major flooding event that impacts the refining sector in Louisiana and impacts gas and diesel,” said Andy Lipow, president of Lipow Oil Associates in Houston. The International Energy Agency (IEA) forecast surging U.S. oil output will outpace sluggish global demand and lead to a large inventory build around the world in the next nine months. “The IEA report is tempering any price rise that we might see from Tropical Storm Barry because the market continues to stumble under the weight of slowing economic growth,” Lipow said. The world energy watchdog’s report came a day after the Organization of the Petroleum Exporting Countries predicted a crude glut next year despite an OPEC-led pact to restrain supplies. The weekly U.S. oil rig count, an indicator of future production, fell for the second straight week, General Electric Co’s (GE.N) Baker Hughes energy services firm said. [RIG/U] Drillers cut four oil rigs in the week to July 12, reducing the total to 784, the lowest since February 2018.

Oil rises nearly 5% for the week on tropical storm and geopolitical tensions – Oil prices posted strong weekly gains on Friday as U.S. Gulf of Mexico crude output was halved by disruptions caused by a tropical storm, but concerns over a global crude surplus in the months ahead limited gains. West Texas Intermediate futures rose nearly 5% this week while Brent climbed more than 4%. On Friday, however, U.S. crude gained just 1 cent to settle at $60.21 per barrel while Brent gained 25 cents to trade at $66.77 per barrel. Tropical Storm Barry, which is expected to become a hurricane just before making landfall this weekend, boosted crude futures as oil companies in the Gulf of Mexico sliced production. “The crude oil market is being supported by the Gulf of Mexico production shut-in… it is going to look to see if Tropical Storm Barry becomes a major flooding event that impacts the refining sector in Louisiana and impacts gas and diesel,” said Andy Lipow, president of Lipow Oil Associates in Houston. Companies cut more than 1 million barrels per day (bpd) of output, or 53% of the region’s production, as the storm headed for possible landfall on the Louisiana coast on Saturday. The International Energy Agency (IEA) forecast surging U.S. oil output will outpace sluggish global demand and lead to a large inventory build around the world in the next nine months. The world energy watchdog’s report came a day after the Organization of the Petroleum Exporting Countries predicted a crude glut next year despite an OPEC-led pact to restrain supplies. “The IEA report laid bare what the market is staring down and what OPEC is staring down next year, and really for the balance for this year, and that will continue to be a headwind,”

Why This Oil Rally Won’t Last – After weeks of gloom, the oil market is tightening up once again. But it’s not clear how long the upward cycle will last. OPEC admitted this week that it may need to keep the production cuts in place, perhaps beyond the latest extension, because of soaring production from U.S. shale. A combination of geopolitical tension in the Persian Gulf, outages in Venezuela and Iran, a pending interest rate cut by the Federal Reserve, and the brewing storm in the Gulf of Mexico has led to strong price increases in oil over the last few days.The rally might have “further to go,” as Standard Chartered put it in a recent note to clients. “We think the rally is likely to continue, allowing Brent to move well above USD 70/bbl and WTI to test above USD 65/bbl,” the investment bank wrote. “Fundamentals are supportive in Q3; we project a 0.5 million barrels per day (mb/d) global supply deficit,” while data from the IEA and OPEC suggests an even larger deficit, analysts with Standard Chartered said.They are not alone. The EIA reported an enormous 9.5-million-barrel decline in inventories last week.“This fourth consecutive weekly decline in US crude oil stocks shows that the US oil market is now tightening too,” Commerzbank said. Storms in the Gulf of Mexico and rising tension in the Middle East are also bullish factors. “The overall situation points to further rising oil prices in the short term,” Commerzbank concluded.But, some of these are temporary factors that could dissipate, especially with shale supply still growing quickly. In OPEC’s latest Oil Market Report, the group laid out the challenge facing oil exporters. Demand growth may only reach 1.14 million barrels per day (mb/d) this year, but supply growth from non-OPEC countries alone could top 2.05 mb/d. Next year, non-OPEC supply could jump by another 2.4 mb/d, with demand again only growing by 1.14 mb/d. In other words, OPEC+ may be stuck with the production cuts, forced to perpetually extend them in a Sisyphean attempt to keep oil prices from collapsing. The supply curtailments do indeed put a floor beneath prices, but that only serves to prop up even more shale drilling.

Two Factors That Point To A Bearish 2020 For Oil – OPEC and allies had little choice but to roll over their production cuts into the first quarter of 2020 amid higher-than-average global inventories, continued uncertainties over the global economy and oil demand growth, and rising rival oil supply, mostly from U.S. shale.The cartel and its non-OPEC partners led by Russia aim to bring the market back to balance and prop up oil prices, or at least put a floor under current prices.While the OPEC+ alliance can and does calibrate its own production, it is not in control of the current key drivers of the oil market – demand growth and rival oil supply.And the current outlook for those two variables point to an ugly oil market in 2020, oil and gas analyst Gaurav Sharma writes for Forbes.Despite rising tension in the Middle East with the U.S.-Iran standoff, despite U.S. sanctions choking off oil supply from Iran and Venezuela, and despite a fragile security situation in Libya, OPEC’s extended cuts failed to excite the market.That’s because supply from outside the OPEC+ group, especially from U.S. shale, continues to grow, inadvertently supported by the restricted supply from OPEC+. But more importantly, because market participants are currently more concerned about the state of the global economy – particularly in a still unresolved U.S.-China trade dispute – and its impact on global oil demand growth, than the likelihood of a major supply outage.Major organizations have downgraded oil demand growth forecasts to reflect uncertainties about the global economy and the U.S.-China trade war. In its June Short-Term Energy Outlook (STEO), the EIA cuts its oil demand growth forecast by 200,000 bpd to 1.2 million bpd for 2019.The International Energy Agency (IEA) also cut in June its demand growth outlook, to 1.2 million bpd this year. World trade growth is now at its slowest pace since the financial crisis ten years ago, the IEA said, citing data from the Netherlands Bureau of Economic Policy Analysis and various purchasing managers’ indices. The consequences for oil demand have already become apparent, with growth in Q1 this year at just 300,000 bpd versus a very strong Q1 2018, the lowest for any quarter since the fourth quarter of 2011.

Libya To Release All Migrants From “Detention Camps” After Tripoli Attack – In a move that will likely result in even greater political instability in Europe, which in recent years has become the primary target for every migrant holed up in Libya and just waiting for the chance to cross the Mediterranean, The New Arab reports that Libya’s UN-backed government is contemplating shutting down slave migrant detention centers and releasing all the detainees for their own safety, after airstrikes targeted one such center on Tuesday in a devastating attack which killed at least 53 people.The strike left at least 130 wounded when it hit a hangar in which the migrants were detained in the Tripoli suburb of Tajoura. In the aftermath of the deadly bombing, Fathi Bashagha, the interior minister of Libya’s Government of National Accord (GNA) told the assistant to the UN special envoy to Libya, Maria do Valle Ribeiro, his government was accountable for the safety of Libyan civilians, including detained migrants.However, Bashagha said the authority did not have the capacity to protect the centers in the face of airstrikes from advanced F16 jets, according to ministry. Ribeiro also discussed the Tanjoura attack with Mohammed Al-Shibani, Libya’s deputy interior minister for migration affairs, agreeing on the need to transfer the hundreds of survivors to safer accommodation. The Libyan justice ministry condemned the attack, vowing to work with humanitarian and migration organisations to repatriate the migrants or resettle them in third countries, because Libya’s compromised security situation could not provide them the safety they require. Despite this, it was revealed on Thursday that around 300 migrants of the centre’s original 600 detainees were still being held there, while the International Organisation for Migration (IOM) said it was providing humanitarian assistance to the remaining detainees. The IOM was unable to confirm reports that dozens of migrants had fled on Tuesday night after the raid.The UN’s humanitarian office OCHA, quoting survivors, said guards at the centre fired on migrants trying to flee causing no casualties, but the GNA interior ministry denied this as “rumours and false information”. Needless to say, a similar rumor in the US – where migrant detention centers have become the focal talking point in domestic politics – could well spark a second civil war.

Turkey Charged With Running Foreign Terrorist “Rat Line” Into Libya – Libya was once a key embarkation point for jihadists headed to foreign battlefields – first in the 1980s Afghan-Soviet War where they supported the CIA-backed mujahideen, and more recently in Syria, where both massive jihadist manpower and heavy weaponry were transferred to the killing fields of Aleppo and Idlib (also, it should be noted, in support of CIA regime change efforts against Assad). But as we described after a recent New York Times report unveiled that US anti-tank missiles have been found in “unknown” Libyan rebel hands fighting within warlord Khalifa Haftar’s ranks, the once stable formerly Gadaffi-ruled Arab North African country which was in 2011 “liberated” at the hands of US-NATO forces has once again become ground zero in a grinding proxy war which has allowed jihadists to run rampant amid the chaos.Whereas a jihadi “rat line” previously ran from Libya into Syria via Turkey, we now have an exact reversal of the prior Syria situation given Turkey is becoming more heavily involved militarily in support of Tripoli’s GNA government, currently under siege by UAE and US-backed Haftar’s LNA. A Libyan official representing the rival Libyan government loyal to Haftar has alleged in a Russian state media interview that Turkey is actively transferring terrorists to fight in Libya. According to Beirut-based Al-Masdar News:A Libyan official told the Arabic language version of Russia’s Sputnik News Agency on Saturday that Turkey is transferring foreign terrorists to Libya to fight the Benghazi-based Libyan National Army (LNA).Speaking to Sputnik from Tobruk, Libyan parliamentarian ‘Ali Al-Sa’eedi Al-Qaidi said that Turkey has been sending terrorists to Libya for quite some time now, highlighting the fact that these militants only attack the [Tripoli-based] Libyan National Army.“The transfer of terrorists is not new. This is a long story. Many terrorists come from Turkey through Tripoli and Misrata to fight the Libyan National Army in Tripoli and obstruct its advance into the center of the Libyan capital of Tripoli,” Al-Qaidi said further.

EU Mulls Sanctions On Turkey After 2nd Drilling Ship Deployed In Cypriot Waters — Turkey and Europe are headed for a showdown in the eastern Mediterranean over Turkish plans for oil and gas exploration and drilling in Cypriot-recognized waters, with the European Union reportedly now mulling cutting financial assistance to Turkey over the illegal drilling. EU envoys are reportedly meeting Wednesday to discuss various punitive measures against Turkey, including suspending aviation talks and even sanctions. The latest crisis was triggered after Turkish drilling vessel Yavuz sailed to an area off Cyprus’ east coast at the start of this week – the second to follow a first drilling vessel, Fatih, which had already been exploring in Cypriot waters. Notably, the vessels have been accompanied by the Turkish military, including drones, F-16 fighters, and warships. Turkish authorities have been brazen in publicizing their territorial claims and actions backing them, even as EU leaders have slammed the now months-long exploration and drilling expansion in solidarity with Cypriot condemnations (since last May). Turkish Vice President Fuat Oktay had warned over the weekend while speaking from the Turkish-occupied north of Cyprus: “Those who move against the legitimate rights of Turkey or the Turkish Cyprus and discount Turkey in the region will not be able to reach their aims,” according to Hurriyet Daily. However, EU foreign minister Federica Mogherini warned Turkey this week that the EU would respond “appropriately and in full solidarity with Cyprus” after Ankara announced the deployment of the Yavuz drilling vessel. Previously, the Fatih had been deployed a mere 42 miles off the west coast of Cyprus.

Russia-Syria assault on Idlib leaves over 500 civilians dead — At least 544 civilians have been killed and more than 2,000 people wounded since a Russian-led assault on the last rebel-held bastion in northwestern Syria began two-and-a-half months ago, according to rights groups and rescuers. Russian fighter jets joined the Syrian army on April 26 in the offensive against rebel-held Idlib and adjoining northern Hama provinces, in the biggest escalation in the war between Syrian President Bashar al-Assad’s forces and rebel fighters since last summer. The Syrian Network for Human Rights (SNHR), which monitors casualties and briefs various United Nations agencies, said on Saturday that 130 children were among the 544 civilians killed in the hundreds of attacks carried out by Russian jets and the Syrian army. Another 2,117 people were wounded. “The Russian military and its Syrian ally are deliberately targeting civilians with a record number of medical facilities bombed,” Fadel Abdul Ghany, chairman of SNHR, told Reuters news agency. Last month, US-based Human Rights Watch said the Russian-Syrian joint military operation had used cluster munitions and incendiary weapons in the attacks, along with large air-dropped explosive weapons, based on reports by first responders and witnesses. The Syrian army and its ally Russia denied the allegations. Moscow says its forces and the Syrian army are fending off attacks by al-Qaeda fighters whom they say hit populated, government-held areas. It also accuses rebels of breaching a ceasefire deal agreed last year between Turkey and Russia.

Denied Iran’s Oil, Syria Has Few Options But Russia – – The noose strangling the flow of oil to Syria tightened a notch last week, when British Royal Marines boarded a tanker carrying Iranian crude into the Mediterranean Sea through the Strait of Gibraltar. With Syria’s Iranian supplies halted, the flow will have to come from somewhere else, and the alternative is troubling. The Very Large Crude Carrier Grace 1 loaded a cargo of Iranian oil from the Kharg Island terminal in mid-April and set off on a long voyage around the southern tip of Africa to the eastern Mediterranean. The ship was apprehended because it was believed to be heading to a refinery that is ultimately owned by Syria’s ministry of petroleum, an entity subject to European Union sanctions. The journey from Iran to Syria around Africa is about 14,500 miles (23,300 kilometers), compared with about 4,100 miles via the Red Sea and Suez Canal. Why take such a circuitous route? Because Iranian crude is not accepted by the owners of the Sumed pipeline, which crosses Egypt to link the Red Sea to the Mediterranean. It is also banned from the Eilat-Ashkelon pipeline across Israel, originally built with the express purpose of carrying the Persian Gulf nation’s output to the Mediterranean. More recently, ships carrying Iran’s crude to Syria also seem to be prevented from using the Suez Canal. That looks to be a new development, since the oil trade between the two countries between 2016 and 2018 via the waterway averaged 50,000 barrels a day. All of those ships involved in that transport that have not been scrapped or sold appear on a list of vessels undertaking sanctionable activity published in March by the U.S. Department of the Treasury’s Office of Foreign Assets Control. This doesn’t mean Iran’s crude is completely forbidden in the waterway, since ships heading to Turkey are still able to pass. But it does mean that Syrian-bound ships carrying its cargoes have to rely on the much longer route around Africa and that a larger ship would make the journey more economic – the Grace 1 can carry twice as much oil as the Sea Shark. But that route passes through European Union waters as ships enter the Mediterranean and it was here that the Grace 1 was impounded. The government of Gibraltar has denied the claim by the Spanish Foreign Affairs Ministry that the action was carried out at the request of the U.S. The Syrian government has two big oil-producing friends, Iran and Russia. With the routes from the first apparently closed, it may have to turn to the second. This presents a new host of potential risks. Impounding an Iranian ship in the Strait of Gibraltar is one thing. Stopping a Russian ship in the Aegean Sea is quite another.

US greenlights missiles for al-Qaeda-linked, Turkish-backed Salafi-jihadists occupying Syria’s Idlib – While the US corporate media continues propagating theconspiracy theory that Donald Trump is a secret Kremlin asset, the Trump administration has approved heavy weapons for al-Qaeda-allied, Turkey-backed militants to fight against a Russian-backed offensive in Syria.The Syrian army has relaunched a campaign to retake the northwestern province of Idlib, which has been under the control of Syria’s al-Qaeda affiliate for more than four years. Washington has responded by greenlighting a cache of US-made anti-tank missiles, rocket launchers, and armored vehicles sent from NATO ally Ankara to sectarian Islamist militants in Idlib.Syria’s ally Russia had negotiated a peace deal with Turkey in September 2018. Ankara is militarily occupying part of northern Idlib, and the NATO member has constructed a dozen military bases in the Syrian province. But after seven months, Turkey and its rebel proxies have still failed to uphold their side of this peace agreement.Under the deal, the Syrian government was supposed to regain access by the end of 2018 to major highways running through Idlib that were partially controlled by Islamist rebels. But Damascus still does not have authority over these critically important roads. The peace agreement additionally stipulated that extremist militants in a demilitarized zone on the edge of Idlib were not allowed to launch attacks on Syrian government-held territory. Yet these Salafi-jihadist rebels have continued indiscriminately attacking civilian territories that are controlled by Damascus. Frustrated with Turkey’s failure to fulfill the peace deal, the Syrian army and Russian military decided to re-initiate their joint campaign to retake Idlib. In April, Moscow began a series of airstrikes; and in early May, Damascus kicked off a ground offensive. The Trump administration immediately condemned this Syrian-Russian campaign to retake Idlib from al-Qaeda militants. US officials also claimed, without providing any evidence, that the Syrian army was using “chemical weapons” in the offensive. (This unsubstantiated accusation came at the same time when a leaked OPCW report suggested that a previous gas attack in Douma, Syria had actually been staged.)

90% Of Palestinians Distrust Jared Kushner’s Peace Plan – After White House Senior Advisor Jared Kushner unveiled his highly anticipated plan for peace in the Middle East during a two-day economic workshop in Bahrain, it was greeted with derision and exasperation by Arab leaders. The Palestinian leadership boycotted the event while a long list of commentators from Arab countries described the plan as “a colossal waste of time” and “dead on arrival”. In fact, as Statista’s Niall McCarthy notes, new polling from the Palestinian Center for Policy and Survey Research has found that nine in ten Palestinians do not trust the goals of the plan. Instead of focusing on the deadlocked political situation, Kushner instead focused on economics, intending to invest $50 billion to fund 179 regional infrastructure projects over the coming decade. $27.6 billion would go to the West Bank and Gaza with the remainder going to Jordan, Egypt and Lebanon. The primary goal of the plan is to allow the Palestinian territories to better access international markets while simultaneously improving key infrastructure such as electricity, water and telecommunications. That would see Palestinian GDP double over the next ten years, generate an estimated one million jobs and halve the poverty rate. The U.S. and Israel would not be responsible for the funding – the Bahrain workshop aimed to raise capital from across the Arab world. As the polling shows, however, an economic plan totally lacking a political dimension is certainly not being viewed as realistic by Palestinians.

Spain Says Iranian Oil Tanker Was Seized by Britain at US Request – In a move that threatens to hugely escalate tensions between Iran and the US, British Royal Marines raided and seized an Iranian oil tanker at Gibraltar on Thursday. The tanker was accused by British officials of heading to Syria in violation of EU sanctions.Iran’s Foreign Ministry confirmed summoning the British Ambassador to express “very strong objection to the illegal and unacceptable seizure” of the ship. Analysts expressed surprise at the unusually aggressive move against a commercial oil tanker.British Premier Theresa May presented the raid as “firm action to enforce EU sanctions,” though Spain indicated that it was actually done because the Trump Administration asked Britain to do so. Spain said they’re looking into it, since the tanker was captured in Spanish territorial waters. While the US hasn’t taken credit for the move yet, John Bolton was cheering the move, saying it would keep Iran from “profiting off the illicit trade,” which to be clear, is Iran shipping Iranian oil to Syria to sell it, when the US insists Iran isn’t allowed to sell any oil, and the EU says Syria isn’t allowed to buy any.

What’s Next for the Oil Tanker Seized by British Forces – When British Royal Marines helped seize an oil tanker off the southern tip of Spain on Thursday, they opened up a legal wrangle that could drag on for months.The Grace 1, a supertanker able to haul 2 million barrels of crude, was arrested in the early hours of July 4 because Gibraltarian authorities said they had grounds to believe it was going to breach European Union sanctions by delivering crude oil to Syria. The cargo came from Iran, which protested against the seizure.With the vessel now sitting inside the Bay of Gibraltar, close to the shore of the British overseas territory, one question being asked is what will it take for the tanker to be released. There are — according to Anna Bradshaw, a partner at the law firm Peters & Peters, who specializes in sanctions — two obvious ways for that to happen. The government of Gibraltar could say that it made a mistake and that it doesn’t think the vessel was in fact breaching EU sanctions. Though that option could see the ship leave the port and sail away, there’s no guarantee that the U.S. wouldn’t try to ensure that the vessel remained seized again as a result of its own sanctions, according to Bradshaw. In reality, since the U.S. has no such jurisdiction, it might struggle to do that, she said.Alternatively, Iran could also successfully defend itself in the Gibraltarian legal system, allowing the vessel to depart. A more likely sequence of events would see the vessel or its cargo detained for a more prolonged period, Bradshaw says. A sequence of events has already been triggered, that could ultimately lead to the ship being released:

• 1) Once the vessel is detained, a court will need to extend the period it can be held for, which starts at 72 hours, and has now been extendedto 14 days
• 2) After that time’s up, the period can be extended again to as long as 90 days
• 3) By then, the government can look to either legally seize the ship and its cargo — known as forfeiture — or possibly sell them; that would see the vessel back on the world’s oceans

All of this could still occur while the ship’s owners and managers answer charges of sanctions breaches. Again, that process is complicated and could be long, particularly given that it’s rare for EU sanctions breaches to have to be tried, and it’s equally rare for a supertanker of oil to be seized mid-transit. A long and wrangling court procedure could also mean that the sale or release of the vessel gets held up. It’s also important to remember that Iran protested against the ship’s seizure, so there is likely to be a much wider political picture going on.

British capture of Iranian tanker won’t go ‘unanswered’ – officer – (Reuters) – Britain’s seizure of an Iranian oil tanker off Gibraltar last week will not be “unanswered”, Iran’s armed forces chief of staff, Major General Mohammad Bagheri, said on Tuesday, according to the semi-official Tasnim news agency. “Capture of the Iranian oil tanker based on fabricated excuses … will not be unanswered and when necessary Tehran will give appropriate answer,” Bagheri said. British Royal Marines boarded the ship, Grace 1, off the coast of Gibraltar on Thursday and seized it over accusations it was breaking sanctions by taking oil to Syria. Iran has demanded the immediate release of the oil tanker, while an Iranian Revolutionary Guards commander threatened on Friday to seize a British ship in retaliation.

Iran-Backed Attack On Merchant Ship In Red Sea Thwarted- Saudi Coalition – As the tanker and pipeline wars in the gulf continue to heat up, Saudi state sources are claiming to have thwarted a new “terror attack” on a commercial ship targeted by Yemen’s Houthis. Spokesman for the Saudi coalition fighting in Yemen, Col. Turki al-Maliki, announced Monday that “Houthis attempted to attack a commercial ship south of the Red Sea using a booby-trapped boat with explosives,” according to a statement from the Saudi Press Agency. Al-Maliki pointed the finger at the “Iran-backed” Shia militia for posing a threat to navigation and international trade, but vowed that the coalition – which has since 2015 included US forces – would “neutralize” all hostile threats in the region. The statements via the Saudi Press Agency suggest that an active, ongoing operation is underway in response to the alleged Houthi targeting of a merchant vessel in the south Red Sea.The Bab El Mandeb strait, located between Yemen on the Arabian Peninsula to the Red Sea’s south, is considered one of the world’s most important trade routes for oil tankers and over the course of the Saudi-Yemen war has been site of multiple military operations launched between the Houthis and Saudis. Impossible to predict Iran’s response vs UK. Expect mischief/hassling of UK tankers in Persian Gulf. Is bigger risk than attack on tanker in Persian Gulf, the wildcard of Iran proxies, in particular the Houthis who have attacked Saudi tankers in the Red Sea/Bab el Mandeb? #OOTT pic.twitter.com/G3QxJNn0Yx – Dan Tsubouchi (@Energy_Tidbits) July 7, 2019 The claimed attack comes a day after the Houthis confirmed they conducted drone attacks on military aircraft hangars and other sites at Jizan airport in southern Saudi Arabia, according to Reuters. Airports in the southern part of the kingdom have been under threat of late from increasingly sophisticated Houthi ballistic missile attacks. Washington and Riyadh have for the past year accused Iran’s IRGC of supplying the advanced medium range rockets to the Shia rebel force fighting the US-Saudi coalition in Yemen.

Insurance rates have ‘increased 10-fold’ after attacks in the Strait of Hormuz, shipping CEO says — Insurance rates for tankers transiting through the world’s most important oil choke point have skyrocketed in recent weeks, according to the CEO of a U.S.-listed shipping company. Six oil tankers and a U.S. spy drone have been attacked since May either in, or near, the Strait of Hormuz – a strategically important waterway which separates Iran, Oman and the United Arab Emirates. “As a shipping company and part of the global shipping industry, we are taking the threat to our crew and ships very seriously,” Anthony Gurnee, CEO of Ardmore Shipping, told CNBC’s “Squawk Box Europe” on Tuesday. Ardmore Shipping is a U.S.-listed company based in Ireland, with a business of owning and operating a fleet of tankers that move refined oil products. “At the moment, it is business as usual (but) insurance to transit the Strait of Hormuz has actually increased 10-fold in the last two months as a consequence of the attacks,” Gurnee said. The attacks brought the U.S. and Iran close to conflict last month. President Donald Trump called off air strikes at the last minute in retaliation for Iran shooting down a U.S. drone over the Gulf, which followed attacks on two oil product tankers in the nearby Gulf of Oman by unidentified assailants. Washington has blamed Iran for the attacks on four oil tankers in the same area on May 12. Tehran has denied the allegations. “Whoever is doing this has demonstrated that they have the ability to be very destructive,” Gurnee said. Every ship needs various forms of insurance, including annual war-risk cover as well as an additional ‘breach’ premium when entering high-risk areas. These separate premiums are calculated according to the value of the ship, or hull, for a seven-day period, Reuters reported. Last month, a Nikkei Asian Review report citing Japanese industry sources said additional insurance for tankers sailing through the Strait of Hormuz now cost 10 times what it did before two ships were attacked earlier in June. CNBC has not been able to independently verify these sources.

Here’s why the Strait of Hormuz is the world’s most important oil chokepoint – The Strait of Hormuz is a critical gateway to the world’s oil industry, with more than a fifth of global oil supply flowing through a narrow sea channel used by Gulf countries like Iran, Saudi Arabia and the United Arab Emirates. The strategically important waterway links crude producers in the Middle East with key markets across the world. Daily oil flow in the Strait averaged 21 million barrels per day in 2018, according to the U.S. Energy Information Administration (EIA). That’s the equivalent of about 21% of global petroleum liquids consumption – making it the world’s most important oil chokepoint. The EIA defines a chokepoint as a narrow channel along widely used global sea routes that are critical to energy security. Therefore, the inability of oil to transit a major chokepoint, even temporarily, can lead to substantial supply delays and higher shipping costs – resulting in higher world energy prices. Most chokepoints can be circumvented by using other shipping channels but some, such as the Strait of Hormuz, have no practical alternatives. Flows through the narrow channel in 2018 made up about one-third of total global seaborne traded oil. More than one-quarter of global liquefied natural gas trade (LNG) also transited the shipping channel last year. The Gulf region has been shaken by a period of heightened instability in recent months, threatening the flow of oil through the Strait. Six oil tankers and a U.S. spy drone have been attacked since May in, or near, the waterway amid intensifying tensions between the U.S. and Iran.

British Oil Tanker Seeks Shelter Over Fears It Could Be Seized By Iran — After a former IRGC commander exhorted his government to take a British oil tanker hostage following the seizure by Royal Marines last week of a vessel hauling Iranian crude, an oil tanker run by British Petroleum is sheltering in the Persian Gulf over fears it could soon be seized by Iran in a tit-for-tat response, Bloomberg reports. The tanker, which is named ‘British Heritage’, is able to haul about 1 million barrels of crude. It had been sailing toward Iraq’s Basrah oil terminal when it made an abrupt U-turn over the weekend.The ship is now hanging out near Saudi Arabia’s coast because BP is reportedly worried that the vessel could be targeted if Iran seeks to retaliate for the seizure of the tanker Grace 1 on Thursday. The Grace 1 was seized after being caught transporting Iranian crude, in breach of sanctions. British Heritage, registered in the Isle of Man and flying under the British flag, had been chartered by Royal Dutch Shell Plc to transport crude from Basrah to northwest Europe. However, it never collected its cargo and the booking was canceled.Of course, the ship won’t be able to pass through the Strait of Hormuz, the chokepoint through which about 1/3 of global oil shipped by sea moves, without sailing close to Iran’s coast. It’s unclear how long the ship will be sheltering for.

Oil Tankers Dodge Main Mideast Refueling Hub— Oil tanker owners are avoiding sending their ships to the Middle East’s main refueling hub after a spate of attacks on vessels in the past two months ratcheted up tensions and highlighted the growing risks of operating in the region. Strikes on tankers just outside the Persian Gulf in mid-June were the second in a month near the Strait of Hormuz, the chokepoint through which about a third of global seaborne oil moves. Now demand for ship fuel at Fujairah, the United Arab Emirates coastal shipping hub close to the Strait, has waned as some tankers stay away, traders involved in the regional market said. “Only expect issues to get worse before they get better,” said Matt Stanley, a senior broker at Star Fuels in Dubai. Fujairah is seeing “a significant drop in demand owing to war-risk premiums” that are levied by ship insurers, he said. The root cause of the slump — whether ships are avoiding the Middle East altogether or just skipping Fujairah — isn’t completely clear. But since the attacks in early May, insurance costs have soared and some owners turned wary of sending their carriers to the region. One of the largest, Frontline Ltd., even temporarily paused trading from the Persian Gulf. Fujairah provides tankers with fuel, supplies and repairs as they ply the route from the Persian Gulf through the Strait of Hormuz to refineries the world over. Local officials say that there’s been no slump in refueling from facilities at the port itself, but that only captures a fraction of the trade. Carriers are also supplied at anchorage areas — where four tankers were attacked in early May — and it’s there that brokers and traders are reporting the drop-off.

Egypt Seizes Tanker Carrying Iranian Crude – Tehran’s threats of retaliation against the UK for seizing a tanker carrying Iranian crude oil for export have prompted a British vessel to shelter in the Gulf, but the rest of the world doesn’t seem to be taking them too seriously. Citing local press reports, Middle East Monitor said Tuesday that a Ukrainian tanker carrying Iranian oil as it passed through the Suez Canal ten days ago was seized by the Egyptian government, just as Egypt’s State Security Criminal Court was sentencing six people to lengthy jail terms allegedly for spying for Iran.Those defendants have all been sentenced to between 15 and 25 years in jail, a $30,000 fine and the confiscation of their computers and phones.Egyptian Al-Azhar Professor Alaa Moawad, who was present at the trial on Sunday, was accused of harming Egypt’s national interests and receiving money to spread Iranian Shiism in Sunni Egypt by launching a website, issuing publications and attracting recruits.Egypt is a staunch ally of the US, and as a Sunni-majority country, would naturally align with the UAE and Saudi Arabia in their efforts to contain Iran. Egypt also supports the Saudi-backed coalition in Yemen that is fighting to retain control in that country’s brutal civil war. Cairo has condemned the Houthis for the recent spate of attacks on Saudi infrastructure that have inflamed tensions in the region.Washington and Riyadh have blamed Iran for a series of attacks on oil tankers in and around the Strait of Hormuz, though there is some disagreement on this subject.Egypt’s decision to seize the tanker adds another wrinkle to the intensifying tensions in the region, at a time when Iran is threatening to enrich uranium to any level it deems necessary, in contravention of the terms of the JCPOA.

Armed Iranian boats attempted to seize British oil tanker in Persian Gulf: reports – Boats believed to belong to the Iranian Islamic Revolutionary Guard Corps failed to seize a British oil tanker in the Persian Gulf on Wednesday, according to reports. U.S. officials with knowledge of the incident told CNN the British Heritage tanker was approached by five armed Iranian boats while sailing out of the Persian Gulf and crossing the Strait of Hormuz. Iranians told the tanker to change course and stop in nearby Iranian territorial waters, CNN reports. An overhead U.S. aircraft recorded a video of the incident, according to CNN. The Hill reached out to the U.S. Department of Defense for comment. Britain’s Ministry of Defense had no immediate comment to Reuters, which reported a U.S. defense official also confirmed the incident. The attempt follows a warning issued from Iranian President Hassan Rouhani earlier in the day that the U.K. will see “consequences” after U.K. Royal Marines and Gibraltar officials reportedly seized an Iranian oil tanker allegedly bound for Syria. “You [Britain] are the initiator of insecurity and you will realize the consequences later,” Rouhani said, according to a Reuters report. CNN reports U.S. Chairman of the Joint Chiefs of Staff Gen. Joseph Dunford said Tuesday U.S. and its allies were working to put together ra coalition to create a system enforcing freedom of navigation in the region.

Iran Keeps Calm While U.S. And Britain Continue Their Provocations – Early today ‘two U.S. officials’ spread a scare story about Iran which lead to thisCNN headline: Iranian boats attempted to seize a British tanker in the Strait of Hormuz Armed Iranian boats unsuccessfully tried to seize a British oil tanker in the Persian Gulf Wednesday, according to two US officials with direct knowledge of the incident. The Iranians ordered the tanker to change course and stop in nearby Iranian territorial waters, according to the officials. The same ‘two U.S. officials’ briefed ABCNews: A British warship prevented an apparent attempt by five Iranian small boats to direct a British oil tanker towards Iranian waters on Wednesday, according to two U.S. officials. Remarkably the official British report came later than the U.S. officials briefing. It showed significant differences: The UK defence ministry said that “three Iranian vessels attempted to impede the passage of a commercial vessel, British Heritage, through the Strait of Hormuz.” “HMS Montrose was forced to position herself between the Iranian vessels and British Heritage and issue verbal warnings to the Iranian vessels, which then turned away,” the ministry statement said. …”There has been no confrontation in the last 24 hours with any foreign vessels, including British ones,” the Revolutionary Guards said in a statement. The U.S. officials claimed 5, not 3 boats. They claimed the boats tried to seize the ship, while the Brits just say they probably were getting in the way of the ship. The U.S. officials ‘direct knowledge of the incident’ seems to be lacking. Iran says that nothing happened at all. There are reasons to believe that the Iranian statement is the most truthful one. The BRITISH HERITAGE is a crude oil carrier with an overall length of 274 m, a beam of 49 m and a maximum draft of 17.8 m. How three of the typical 20 feet long fiberglass speedboats of the IRGC could try to ‘seize’ or even ‘impede’ such a huge ships is not conceivable.

US State Department Now Says Drone Attack on Saudi East – West Pipeline Originated in Southern Iraq – In a change of the official U.S. assessment of the drone attack on Saudi Arabian oil infrastructure, the American government now says the drone attacks originated in southern Iraq and not Yemen, as previously reported. US officials added that the drones involved in this attack were more “sophisticated’ that those used by Houthi rebels in Yemen. The 14 May drone attacks hit two pipeline segments along the major Saudi East-West oil pipeline. The Saudis said supply was not disrupted and that no one was injured. After further review, US officials familiar with the intelligence declared the attacks originated in southern Iraq, a charge which was promptly denied by Iraqi Prime Minister Abdul Mahdi. He said there was no evidence linking southern Iraq with such attacks. The drone attack followed the sabotage of four tankers off of the UAE coast, including two from Saudi Arabia. Just weeks later, two more tankers were attacked in the Gulf of Oman, near the Strait of Hormuz, further escalating tensions in the region.

Iran steps further from nuke deal, adding pressure on Europe (AP) – Iran increased its uranium enrichment Sunday beyond the limit allowed by its 2015 nuclear deal with world powers, inching its program closer toward weapons-grade levels while calling for a diplomatic solution to a crisis heightening tensions with the U.S. Iran’s move, coupled with earlier abandoning the deal’s limit on its low-enriched uranium stockpile, intensifies pressure on Europe to find any effective way around U.S. sanctions that block Tehran’s oil sales abroad. But the future of the accord that President Donald Trump unilaterally pulled the U.S. from a year ago remains in question. While Iran’s recent measures could be easily reversed, Europe has struggled to respond, even after getting a 60-day warning that the increase was coming. Meanwhile, experts fear a miscalculation in the crisis could explode into open conflict, as Trump already has nearly bombed Iran over Tehran shooting down a U.S. military surveillance drone. Trump warned Tehran on Sunday that “Iran better be careful.” He didn’t elaborate on what actions the U.S. might consider, but Trump told reporters: “Iran’s doing a lot of bad things.” International reaction to Iran’s decision came swiftly, with Britain warning Iran to “immediately stop and reverse all activities” violating the deal, Germany saying it is “extremely concerned,” and Israeli Prime Minister Benjamin Netanyahu, a longtime critic of the accord, urging world powers to impose so-called “snapback sanctions” on Tehran. The European Union said parties to the deal are discussing a possible emergency meeting after Iran’s announcement, with EU spokeswoman Maja Kocijancic saying the bloc is “extremely concerned” about the move. U.S. Secretary of State Mike Pompeo tweeted: “Iran’s latest expansion of its nuclear program will lead to further isolation and sanctions. Nations should restore the longstanding standard of no enrichment for Iran’s nuclear program. Iran’s regime, armed with nuclear weapons, would pose an even greater danger to the world.”

Factbox: Iran nuclear row – could U.N. sanctions return? (Reuters) – Iran said on Sunday it would further scale back its commitment to the 2015 nuclear deal with world powers, raising its uranium enrichment level beyond agreed levels to produce fuel for power plants. Tehran vowed to keep reducing its commitments every 60 days unless parties to the deal moved to protect it from U.S. sanctions. Such moves by Iran could ultimately lead to the return of all international sanctions on the country if a party or parties to the deal trigger its dispute resolution process. That process will not be triggered for now, said a source at French President Emmanuel Macron’s Elysee office on Sunday. The French government is giving itself until July 15 to try to get all parties talking again. Most U.N. sanctions were removed in January 2016 when the deal was implemented. It is formally called the Joint Comprehensive Plan of Action (JCPOA) and was agreed by the United States, Iran, Britain, China, France, Germany and Russia. U.S. President Donald Trump withdrew the United States in May 2018 saying the accord did not go far enough and did not address Iran’s missile program or activities in the Middle East. Iran argues that, under the nuclear deal’s dispute resolution process, the U.S. withdrawal and renewed sanctions campaign constitute “significant non-performance” and Tehran can “treat the unresolved issue as grounds to cease performing its commitments in whole or in part.” However, two Western officials with knowledge of the accord, speaking on condition of anonymity, said Iran has never formally triggered the dispute resolution process. Iran also argues that it can reduce in its commitment because, under a separate provision, the agreement said: “Iran has stated that it will treat such a re-introduction or re-imposition of the sanctions … or such an imposition of new nuclear-related sanctions, as grounds to cease performing its commitments under this JCPOA in whole or in part.” Here is how the dispute resolution process, which could take up to 65 days to play out unless extended by consensus, works:

Netanyahu Compares Iran’s Uranium Enrichment Breach To Nazi March Into Rhineland – Usually the ‘reductio ad hitlerum’ argument rolls out shortly before the West or its allies take some kind of military action against a Middle East regime. Following Sunday’s announcement out of Iran that it’s advancing its uranium enrichment beyond the 3.67% ceiling set by the 2015 nuclear deal – with officials telling Reuters over the weekend that enrichment will go to 5% – Israeli Prime Minister Benjamin Netanyahu did just that. Speaking at a weekly cabinet meeting, Netanyahu told his ministers that it’s a “mistake” to dismiss Iran’s declaration as a mere “small step” given that the Nazis also took “small steps” in the 1930s before blitzing across European territory. He said Iran’s enrichment “is for only one thing – to prepare nuclear weapons,” according to The Jerusalem Post.

Iran nuclear deal: Macron and Rouhani agree to look at conditions for talks – France and Iran have agreed to look at conditions for resuming talks to try to save Tehran’s nuclear deal with world powers, President Emmanuel Macron says. During a phone call with President Hassan Rouhani, Mr Macron expressed his “strong concern” about the consequences of abandoning the 2015 accord. Mr Rouhani called on European countries to act urgently to save the deal aimed at curbing Iran’s nuclear programme. The agreement has been in jeopardy since the US pulled out last year. President Donald Trump later imposed punishing sanctions on Iran. In May, Iran responded by stepping up production of enriched uranium, used to make reactor fuel but also potentially nuclear bombs. Iran has already stockpiled more enriched uranium than the country was supposed to. The country has been expected to announce on Sunday that it will breach another limit by taking the enrichment process to a higher level. It is going to be hard – if not impossible – to get the Americans back on board, BBC Diplomatic Correspondent Jonathan Marcus writes. The Europeans are struggling to do much to relieve the pressure on Iran from US sanctions and the fate of the nuclear deal itself is now more precarious than ever, he adds. The French presidency published a statement (in French), saying that President Macron had spoken for more than an hour with his Iranian counterpart. Mr Macron said he was very concerned about the “risk of a further weakening” of the treaty and “the consequences that would necessarily follow”. The statement said the two leaders had agreed “to explore by 15 July the conditions for the resumption of dialogue between all parties” – beyond a Sunday deadline announced by Iran. Mr Rouhani had previously given the five countries still party to the deal – the UK, France, Germany, China and Russia – until Sunday to meet their commitment to shield Iran from the sanctions’ effects. The French statement also said Mr Macron would continue consultations with the Iranian side and international partners to reduce tensions.

US steps up threats as Iran exceeds uranium enrichment cap – The International Atomic Energy Agency (IAEA) Monday confirmed that Iran has breached the limit imposed by the 2015 nuclear agreement on the level at which it is allowed to enrich uranium. Iran had announced its breach of the limit on Sunday, a deliberate step aimed at pressuring the remaining signatories to the nuclear accord – particularly Germany, France and the UK – to take substantive steps to counter crippling US economic sanctions that are tantamount to a state of war. Washington has taken a series of actions that have placed the threat of a war in the Persian Gulf on a hair trigger, raising the specter of a catastrophic military confrontation in a region that is the source of a third of the world’s natural gas and a fifth of its oil. In May 2018, the Trump administration unilaterally abrogated the agreement, known as the Joint Comprehensive Plan of Action (JCPOA), that was reached between Tehran and six major world powers – the US, China, Russia, Britain, France and Germany. It not only reimposed nuclear sanctions that had been suspended with the agreement but implemented a series of even more punishing measures. The increase in the enrichment level – which had been capped at 3.67 percent and has risen to 4.5 percent, according to Iranian authorities – follows last month’s announcement by Iran that it was deliberately exceeding the 300 kg cap imposed by the JCPOA on its enriched uranium stockpiles. The country is supposed to export any excess amounts, but even that option has been undermined by the US “maximum pressure” sanctions regime. Tehran indicated that it will impose another 60-day deadline for the European powers to take concrete steps to ensure that Iran receives the sanctions relief that it was promised in return for its submission to drastic limits on its nuclear program.

Iran declares war on the USA’s covert influence in Iraq.– When US officials visited Baghdad and met with the Iraqi Prime Minister Adel Abdel Mahdi, they had two requests: first, to close all commerce and financial exchanges with Iran to strangle the Iranian economy and bring it to its knees. The second was to neutralise the Iraqi groups (known as Hashd al-Shaabi) which sympathise with Iran and carry a similar ideology. The Iraqi Premier is aware he is being pushed into the heart of two minefields, Iranian and American, and therefore he cannot just walk straight into these fields. He has decided to reject the first US demand because Iraq has religious, commercial and energy bonds with Iran. He is refusing to transform Iraq into a US-Iran battlefield where no winner can be expected to stay on his feet, including Iraq. He wants to force the US administration to back down and agree to provide Iraq with waivers to buy Iranian gas and keep commercial exchange flowing. What were Abdel Mahdi’s reasons for responding to US pressure? He did not want to have the Americans on his back or turn the country upside down. Therefore, though he refused to satisfy US officials in their first request, he did take account of the latter, seeking to avoid a potential coup d’état and a possible US manoeuvre to allow the return of the terrorist group “Islamic State” (ISIS). The Prime Minister issued Diwani Order (decree) no. 237 “to organise Hashd al-Shaabi, where all factions close their headquarters and have the option to either join the armed forces or engage in political activity (unarmed). Any faction acting secretly or publicly bypassing these instructions is forbidden. Compliance with the ultimatum is required by the 31 of July”. The US administration was satisfied with this move, but…

China Backs Iran: Trump ‘Started the Fire,’ ‘unilateral bullying’ ‘a tumor’ – China is openly blaming the Trump administration for the breakdown of the 2015 Iran nuclear deal, known as the Joint Comprehensive Plan of Action (JCPOA), according to the official Xinhua News AgencyForeign Ministry spokesperson Geng Shuang said at a daily press briefing, “The ‘maximum pressure’ against Iran imposed by the United States is the root cause of the crisis concerning the Iran nuclear issue.” He added that “unilateral bullying has become a tumor.”He added “that the U.S. has not only withdrawn from the deal unilaterally but also created an increasing number of hurdles against Iran and other parties through unilateral sanctions and long-arm jurisdiction.”The spokesman also rebuked Iran for tinkering around the edges with the terms of the nuclear deal.In its roundup for Monday, BBC Monitoring points out that Xinhua called Iran’s decision to enrich uranium to 5% instead of the 3.5% cap set in the JCPOA a “symbolic countermeasure.”This comment is correct. You can’t do anything with uranium enriched to 5%. You only need to enrich to 3.5% for reactor fuel. You’d have to enrich to 95% to make a bomb (something Iran is not known to be able to do and which the CIA has repeatedly assessed it is not trying to do). So enriching to 5% is just a symbolic way of tweaking Trump.Xinhua, BBC Monitoring reports, alleges that Iran has been “forced to fight back”g given severe US sanctions.In an editorial in English, Xinhua rebuked Trump for remarking that Iran is “playing with fire,” observing that “it is clear to all that Washington started the fire by unilaterally withdrawing from the deal and tightening anti-Iran sanctions.”The editorial concluded, “To prevent the situation from spiralling out of control, fully and effectively implementing the Iran nuclear deal is the only realistic and effective way to ease the tensions and eventually solve the Iran nuclear issue.” China continues to buy Iranian oil, apparently often on the sly and in ways that do not show up in official Iranian statistics.

Cholera Rips Through War-Torn Yemen- Nears 500,000 Cases In 2019 — As the UAE announced this week it would withdraw its forces from Yemen as a longtime lead country in the Saudi coalition which has fought Houthi rebels since 2015, the United Nations issued a damning report on what it previously dubbed the “world’s worst humanitarian crisis” and what many analysts have described as the “forgotten war,” due to the little coverage it receives in the mainstream media. War-ravaged Yemen has seen more than than 460,000 suspected cholera cases so far this year, which is significantly higher that the total number for all of 2018, at 380,000 – the UN stated early this week.This as the over four-year long war is has reached casualty numbers on par with the opening half of the Syrian war, expected to reach an estimated 233,000 deaths by the end of 2019, according to a previous UN report issued in May. In addition to famine, malnutrition, cholera, and other diseases, the new UN statements noted lack of access to clean drinking water for vast segments of the population, which has facilitated the rapid spread of diseases uncommon in much of the rest of the world, specifically cholera. The AP cited UN deputy spokesman Farhan Haq as noting that the “increased number of cases has led to 705 apparent cholera deaths since January, dramatically higher than the 75 deaths in the same period last year.”The UN also estimated that some 10 million Yemenis currently rely on food aid to survive – a figure that’s 50% higher compared to pre-war assessments. The UN also confirmed “pockets of famine-like conditions in dozens of places across Yemen.”

How UAE’s Yemen Exit Is Preparation To Confront Iran Closer To Home – A United Arab Emirates decision to withdraw the bulk of its forces from Yemen shines a spotlight on hard realities underlying Middle Eastern geopolitics. The pullback suggests that the UAE is preparing for the possibility of a US military confrontation with Iran in which the UAE and Saudi Arabia could emerge as prime battlegrounds. It also reflects long-standing subtle differences in the approaches of Saudi Arabia and the UAE towards Yemen. It further highlights the UAE’s long-standing concern for its international standing amid mounting criticism of the civilian toll of the war as well as a recognition that the Trump administration’s unquestioning support may not be enough to shield its allies from significant reputational damage. The withdrawal constitutes a fine-tuning rather than a reversal of the UAE’s determination to contain Iran and thwart political Islam witness the Emirates’ involvement in the Libyan civil war and support for renegade field marshal Khalifa Belqasim Haftar as well as its support for the embattled Sudanese military and autocrats like Egyptian general-turned-president Abdel Fattah al-Sisi. While the UAE may have withdrawn the bulk of its troops from key regions of Yemen, it leaves behind Emirati-trained local forces that will continue to do its bidding. The withdrawal, moreover, is not 100 percent with the UAE maintaining its Al-Mukalla base for counterterrorism operations. The UAE’s commitment to assertive policies designed to ensure that the small state can continue to punch above its weight are also evident in its maintenance of a string of military and commercial port facilities in Yemen, on the African shore of the Red Sea, and in the Horn of Africa as well its hard-line towards Qatar and rivalry with Turkey. As part of its regional and international projection, the UAE is keen to maintain its status as a model for Arab youth and preferred country of residence. The UAE’s image contrasts starkly with that of Saudi Arabia, the custodian of Mecca and Medina, Islam’s two holiest cities. Crown Prince Mohammed bin Salman’s policies, including the clampdown on domestic critics and the Yemen war, have prompted embarrassing calls by prominent Islamic scholars for a boycott of the pilgrimage to Mecca, one of the five pillars of Islam.

Saudi Arabia deports 858,355 illegal residents since November 2017 — Saudi Arabia has deported at least 858,355 illegal foreigners since November 2017 in a nationwide crackdown that saw more than 3.44 million people rounded up in various parts of the Kingdom for violating residency and labor regulations. The Interior Ministry said security forces apprehended a total of 3,443,455 expatriates in what is dubbed as a Nation Free of Illegals campaign until Thursday, July 4, the Saudi Press Agency reported late Friday quoting campaign officials. The campaign was launched in mid-November 2017 with the participation of 19 ministries and government departments including the Ministry of Labor and Social Development and the Directorate General of Passports. The officials said 2,684,975 people were arrested for violating the system of residency, 531,195 for not adhering to labor regulations and 227,285 for trying to breach border security. They said 58,032 people were arrested while sneaking into the Kingdom through its southern borders. About 47 percent of the infiltrators were Yemenis, 50 percent Ethiopians and 3 percent from various other nationalities. According to the campaign sources, 2,511 people were caught while attempting to leave the Kingdom illegally while 3,988 people were charged with sheltering illegal residents by providing with accommodation and transportation. They included 1,372 Saudi nationals, of whom 1,331 were released after they underwent punishments while 41 others are still under investigation. The sources said 13,000 illegal expatriates, including 11,047 men and 1,953 women, were currently being held in various detention centers in the country. They said 446,179 violators were referred to their respective embassies and consulates to issue them travel documents while 569,346 were completing their flight bookings for final exit from the Kingdom.

The Taliban Have Won In Afghanistan – On June 26 two US special forces soldiers were killed in Afghanistan, bringing the total of US military personnel who have died in that useless war to 2429, according to iCasualties, an independent casualty tracker. What did they die for? According to the US State Department the military are there because “we continue to invest US resources to help Afghanistan improve its security, governance, institutions and economy,” and the Pentagon says “the principle goal… is to conclude the war in Afghanistan on terms favourable to Afghanistan and the United States.” How? Neither the current occupant of the White House nor any others aspiring to become president in 2020 have produced any workable proposals to end this disastrous conflict, and in an exchange of views on June 27 two of the Democratic contenders cast some light on the darkness of frustration and confusion. Members of Congress Tim Ryan and Tulsi Gabbard had a heated argument that involved Gabbard (who had served in Iraq) declaring that “The Taliban was there long before we came in; they’ll be there long before we leave. We cannot keep US troops deployed to Afghanistan thinking that we’re somehow going to squash this Taliban.” Even if she didn’t offer a solution, she is perfectly right – but it was the rejoinder of Congressman Ryan that was eye-opening. He said “I didn’t say squash them. When we weren’t in there, they started flying planes into our buildings.” Gabbard was astonished, as well she might be, and replied “The Taliban didn’t attack us on 9/11; al-Qaeda did. That’s why I and so many other people joined the military – to go after al-Qaeda. Not the Taliban.” Exactly. Fifteen of the 19 al-Qaeda hijackers were Saudis, two came from the United Arab Emirates and one each from Lebanon and Egypt. USA Today reported that they had “multiple links to associates of Saudi Arabian Prince Bandar, the former longtime ambassador to the United States. The documents show possible conduits of money from the Saudi royal family to Saudis living in the United States and two of the hijackers in San Diego. The documents also indicate substantial support to California mosques with a high degree of radical Islamist sentiment.” Not a Taliban in sight. In spite of the fact that the head man, the evil bin Laden, was in Afghanistan (and was later killed in Pakistan in a US special forces raid) the main 9/11 planning centre was in Hamburg.

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