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Israel versus Iran: Round two looming?

  • Market: Crude oil, Natural gas
  • 04/08/24

The region is braced for a possible rerun of Iran's April attack on Israel, writes Bachar Halabi

The confrontation between the Middle East's two leading military powers — arch-enemies Israel and Iran — has entered a new phase of escalation. Israel is taking the fight to Iranian proxies in Tehran's so-called "Axis of Resistance" as the Gaza campaign dials down, and the risk of a wider conflagration is rising.

The conflict between Israel and Palestinian group Hamas has been regionalised from the start, but remained contained even when Iran and Israel traded direct blows for the first time ever in April. Lebanon's Iran-backed militia group, Hezbollah, joined the war on 8 October — the day after Hamas' attack on Israel — by opening what it called a "support front" for Hamas. Iraqi Shia militias and Yemen's Houthis followed suit by claiming to target Israel through a mix of drone and missile strikes, or by attacking global shipping lanes in the Red Sea.

But, over the past few weeks, Israel has gone on the offensive against proxy group leaders. Hamas' chief political leader Ismail Haniyeh was killed in Tehran on 31 July. Israel neither denied nor confirmed responsibility, but Iran is pointing the finger.The attack in Tehran came only hours after Israel claimed responsibility for a strike in the suburbs of the Lebanese capital Beirut that targeted Hezbollah's most senior military commander and one of its founding fathers, Fuad Shukr. And Israel's military on 20 July struck Yemen's Houthi-controlled Red Sea port of Hodeidah, in a first-of-its-kind attack by the Israeli side, in retaliation for a drone attack by the Iran-backed militant group on Tel Aviv a day earlier.

"I think when you put them all together, this is really a message to Iran, which has been operating more or less on seven fronts against Israel — Iraq, Iran, Yemen, Syria, Lebanon, the West Bank and Gaza," former US assistant secretary of state for near eastern affairs David Schenker tells Argus. But he also attributes Israel taking things into its own hands to the reticence of the US administration. "There is a division of labour [among Israel and the US] and the Israelis are responsible for their close enemies, while the US is responsible for the Houthis."

Calculations trump ceasefire

A regional diplomatic source sees a different impetus: "I think [Israel's] bold moves are the result of the withdrawal of President Biden from the presidential race" which frees him from electoral calculations. Israeli prime minister Benjamin Netanyahu "has no intention of reaching a ceasefire in Gaza before the outcome of the US election is known. He believes that a potential Trump administration would be more understanding of Israel's future plans for Gaza", the source says.

The region is now bracing for a possible rerun of Iran's 13 April attack on Israel, except that the risk of miscalculation is higher, with the axis vowing revenge. "We are looking for a real response, not a performative response," Hezbollah's secretary general Hassan Nasrallah said on 1 August. The US, EU and many Mideast Gulf countries are trying to contain the situation.

"Hezbollah and Iran want to avoid a full-scale war with Israel and their responses to the recent wave of assassinations will be measured to avoid dragging themselves into a situation of total regional war that could also drag in the US," the diplomatic source says. Iran, however, finds itself in a tough situation, with what happened in Tehran being "incredibly embarrassing for Iranian officials", according to Schenker. The questions now are when and how it might respond.

With Israel also targeting Hezbollah in Beirut, the group might yet lead that response. "They're going to do something big… but they're going to try to calibrate [it] with not going for a full-scale war," Schenker predicts. The axis' retaliation could come within days, or it could take weeks. How Netanyahu then reacts to it could shape the regional confrontation for months or years to come.


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12/12/24

Opec+ decision reduces potential supply surplus: IEA

Opec+ decision reduces potential supply surplus: IEA

London, 12 December (Argus) — The recent decision by Opec+ members to delay a planned output increase has "materially reduced" a potential supply surplus next year, the IEA said today. Opec+ producers earlier this month pushed back a plan to start unwinding 2.2mn b/d of voluntary crude production cuts by three months to April 2025 and to return the full amount over 18 months rather than a year. Still, the oil market in 2025 is still likely to be significantly oversupplied, the IEA said in its Oil Market Report (OMR), given persistent overproduction by some Opec+ members, strong supply growth from outside the alliance and modest global oil demand growth. The Paris-based agency's base case forecasts show supply exceeding demand by 950,000 b/d next year, even if all Opec+ cuts remain in place. The supply surplus would increase to 1.4mn b/d if alliance members start increasing output from April as planned, the IEA said. This is far from guaranteed. Opec+ has already delayed its plan to increase output three times and continues to say a decision to unwind will depend on market conditions. While the IEA expects oil demand growth to remain subdued next year, its latest forecasts show a slightly higher outlook than in its previous report . The agency revised up its oil demand growth forecast for 2025 by 90,000 b/d to 1.1mn b/d, largely because of China's recently announced economic stimulus measures. This would see global consumption rise to 103.9mn b/d. But the IEA downgraded its oil demand growth forecast for this year by 80,000 b/d, to 840,000 b/d, mostly because of "weaker-than-expected non-OECD deliveries in countries such as China, Saudi Arabia and Indonesia." It said non-OECD oil demand growth in the third quarter, at 320,000 b/d, was the lowest since the height of the Covid-19 pandemic. The IEA said lacklustre demand growth this year and next reflects "a generally sub-par macroeconomic environment and changing patterns of oil use." Increases will be driven by petrochemical feedstocks, and demand for transport fuels "will continue to be constrained by behavioural and technological progress." On supply, the IEA downgraded its growth estimates for 2025 by 110,000 b/d to 1.9mn b/d. Most of this will come from non-Opec+ countries such as the US, Canada, Guyana, Brazil and Argentina. The agency nudged lower its supply forecasts for this year, by 10,000 b/d to 630,000 b/d. The IEA said global observed oil stocks declined by 39.3mn bl in October, led by an "exceptionally sharp" fall in oil product inventories due to low refinery activity coupled with higher demand. It said preliminary data show a rebound in global inventories in November. By Aydin Calik Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

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US inflation rises to 2.7pc in November


11/12/24
News
11/12/24

US inflation rises to 2.7pc in November

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Opec trims oil demand growth forecasts again


11/12/24
News
11/12/24

Opec trims oil demand growth forecasts again

London, 11 December (Argus) — Opec has revised down its global oil demand growth forecasts for 2024 and 2025 for a fifth time in a row. In its final Monthly Oil Market Report (MOMR) of the year, the producer group has cut its 2025 oil demand growth forecast by 90,000 b/d to 1.45mn b/d. This is entirely driven by a downgrade in its demand projection for the Middle East. From the start of this year right up until July, Opec had been forecasting global demand growth of 1.85mn b/d for next year. The group has also lowered its demand growth forecast for this year — by 210,000 b/d to 1.61mn b/d, mostly driven by reduced growth projections in the Middle East, India and the Americas. Up until July, Opec had been predicting that demand would increase by 2.25mn b/d this year. Opec's downward demand growth revisions slightly close the gap with other forecasters such as the IEA and EIA, which project much lower levels of consumption growth. The IEA sees oil demand growing by 920,000 b/d this year and by 990,000 b/d next year, while the EIA projects 890,000 b/d and 1.29mn b/d, respectively. On supply, Opec has kept its non-Opec+ liquids supply growth forecast for next year unchanged at 1.11mn b/d. But it has upgraded its estimate for this year by 50,000 b/d to 1.28mn b/d, underpinned by stronger-than-expected US production. Opec+ crude production — including Mexico — increased by 323,000 b/d to 40.665mn b/d in November, according to an average of secondary sources that includes Argus . The call on Opec+ crude remains 42.4mn b/d for this year and 42.7mn b/d for next year, according to the MOMR. Opec+ producers agreed earlier this month to delay a plan to start unwinding 2.2mn b/d of voluntary cuts by three months to April 2025 and to return the full amount over 18 months rather than a year. By Aydin Calik Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

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Brazil's inflation accelerates to near 5pc in November


10/12/24
News
10/12/24

Brazil's inflation accelerates to near 5pc in November

Sao Paulo, 10 December (Argus) — Brazil's headline inflation accelerated to a 14-month high in November, led by gains in food and transportation, according to government statistics agency IBGE. The consumer price index (CPI) rose to an annual 4.87pc in November from 4.76pc in the previous month, IBGE said. Food and beverage costs rose by an annual 7.63pc in November, accounting for much of the monthly increase, following a 6.65pc annual gain in October. Beef costs increased by an annual 15.43pc in November following an 8.33pc annual gain for the prior month. Higher beef costs in the domestic market are related to the Brazilian real's depreciation to the US dollar, with the exchange rate falling to a record-low R6.11/$1 at the end of November. The stronger dollar leads producers to prefer exports over domestic sales. Beef prices rose by 8pc for the month alone. Soybean oil prices rose by 27.75pc over the year. Transportation costs, another major contributor to the monthly acceleration, rose by an annual 3.11pc in November after a 2.48pc gain in October. On a monthly basis, transportation costs rose by 0.89pc in November, reversing a contraction of 0.38pc in October. Housing costs rose by 4pc over the 12-month period. Brazil's central bank last month hiked its target rate to 11.25pc, its second increase off a low of 10.5pc between May and September, to try to head off a resurgence in inflation. It was at a cyclical peak of 13.75pc from August 2022 through July 2023 as it sought to tamp down the post-Covid-19 surge in inflation. Fuel prices rose by an annual 8.78pc in November after a 7.22pc gain in October. Motor fuel costs fell by 0.15pc in November compared with a 0.17pc drop in October — thanks to lower ethanol and gasoline prices. Diesel prices contracted by 2.25pc in the 12-month period. Power costs slowed to an annual 3.46pc in November following a 11.58pc gain in October. Electricity prices contracted by a monthly 6.27pc after a decrease in power tariffs on 1 November. Monthly inflation slowed to 0.39pc in November from 0.56pc in October. The central bank's inflation goal for 2024 is 3pc, with a margin of 1.5pc above or below. By Maria Frazatto and Lucas Parolin Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

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Meta sites largest data center in Louisiana


10/12/24
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10/12/24

Meta sites largest data center in Louisiana

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