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Emerging Markets Daily - May 16
Iran Preps for Return to Oil Markets, Emerging Markets and Huawei, Turkish Lira Plummets, Israel Strikes AP Office as Crisis Escalates, African Space Ambitions
The Top 5 Emerging Markets Stories from Global Media - May 16
Iran Preps For a Return to Global Oil Market As Nuclear Talks Progress
“Iran is preparing to ramp up global oil sales as talks to lift U.S. sanctions show signs of progress. But even if a deal is struck, the flow of additional crude into the market may be gradual.”
“State-controlled National Iranian Oil Co. has been priming oil fields -- and customer relationships -- so it can increase exports if an accord is clinched, officials said. In the most optimistic estimates, the country could return to pre-sanctions production levels of almost 4 million barrels a day in as little as three months. It could also tap a flotilla’s worth of oil that’s hoarded away in storage.”
“But there are many hurdles to overcome before than can happen. Any agreement must fully dismantle the gamut of U.S. barriers on trade, shipping and insurance involving Iranian entities. Even then buyers may still be reluctant, according to Mohammad Ali Khatibi, a former official at NIOC.”
“‘Our return may be a gradual process rather than swift and sudden -- it can’t happen overnight,’ Khatibi said in an interview. It may be ‘a protracted process, in part due to the coronavirus pandemic that’s significantly hurt demand.’”
“The pace of Iran’s comeback may prove critical for the oil market. While fuel consumption is on the rebound, it remains depressed by lockdowns and new virus outbreaks. Extra Iranian supplies would impose a burden on other members of OPEC+, which has toiled for more than a year to clear a supply glut built up as the pandemic spread.”
“U.S. and Iranian diplomats, currently negotiating via intermediary governments in Vienna, have signaled that an agreement is within reach.” Anthony Di Paola, Ardalan Shahla, and Grant Smith report.
Developing Countries Sign Huawei Deals Despite US Espionage Warnings
“US warnings of espionage by Huawei are failing to dissuade governments in Africa, Asia and Latin America from hiring the Chinese tech group for cloud infrastructure and e-government services, a study has found.
“The report by the Washington-based think-tank CSIS seen by the Financial Times identified 70 deals in 41 countries between Huawei and governments or state-owned enterprises for these services from 2006 to April this year.
“Cloud infrastructure usually refers to the installation of data centres, while e-government mainly involves automating administrative functions such as licensing, healthcare, legal records and other government processes.” James Kynge reports
Turkish Lira Hits Six Month Low, Stocks Under Pressure
“A rolling decline in Turkey’s lira accelerated Thursday as the currency slid to a six-month low after US inflation data put pressure on most emerging markets.”
“The lira fell about 0.8% Thursday, briefly surpassing 8.5 to the dollar, just shy of its 8.58 record low in November. The news weighed on Turkish markets, which were closed for the Muslim holiday of Eid al-Fitr, and Turkish stocks appeared headed for their worst day since late March due to an offshore selloff.”
“With low foreign exchange reserves and a Central Bank hesitant to tighten monetary policy amid double-digit inflation, Turkey’s economy remains highly vulnerable to global market trends.”
“The latest tremor comes after US consumer prices jumped to 4.2% Wednesday, up from 2.6% in March, its steepest rise since 2008. The figures raised expectations the US Federal Reserve will tighten its monetary policy sooner than expected, sending most emerging market currencies down Thursday, with the Turkish lira leading the cohort.” Diego Cupolo reports.
Israel Airstrikes Destroy AP Office in Escalating Conflict
“Israel slammed the Gaza Strip with airstrikes, in a dramatic escalation that included bombing the home of a senior Hamas leader, killing a family of 10 in a refugee camp — most of them children — and pulverizing a high-rise that housed the Associated Press and other media.”
“The Hamas militant group continued a stream of rocket volleys into Israel, including a late-night barrage on Tel Aviv. One man was killed Saturday when a rocket hit his home in a suburb of the seaside metropolis.”
“With a U.S. envoy on the ground, calls increased for a cease-fire after five days of mayhem that have left at least 145 Palestinians dead in Gaza — including 41 children and 23 women — and eight dead on the Israeli side, all but one of them civilians, including a 5-year-old.” Fares Akram and Lee Keath report
African Space Firms Poised for Lift-off in Satellite Scramble
“Once seen as an unaffordable folly, data-harvesting and internet-boosting satellites are now a focus of African governments and businesses.”
“African governments spent $490m on space programmes in 2020, up from $250m in 2019, according to the latest report on the continent’s space industry by consultants Space in Africa. Satellite manufacturing, and the trade in satellite-harvested big data analytics, are seen as particularly well positioned for growth.”
“In March, Tunisia became the sixth African country to manufacture a satellite, launching Africa’s 43rd into orbit. Challenge 1, built by Tunisian company Telnet Holding, was launched from Kazakhstan on board a Russian Soyuz 2 rocket.”
“Space in Africa predicts 110 African-owned satellites will launch by 2024, and the African Union Commission is enacting its African Space Policy signed in 2017, with Egypt poised to host its headquarters.” Will McBain reports