Fra Danske Bank:
As we write, the whole world awaits Iran’s response to the latest US proposal – a one-pager that aims to solve the most pressing issues regarding the SOH and Iran’s nuclear program, while allowing a 30-day negotiation period for the more complex issues. Earlier today, media referred to a new CIA report that suggests Iran could withstand US blockade for 3-4 more months and has 70% of its missile stockpiles remaining. Also, the UAE said they had intercepted missiles and drones from Iran, and last night, the US and Iran had again exchanged fire in the Strait of Hormuz.
In this month’s Radar, we also discuss United Arab Emirates departure from OPEC. The announcement was not a major surprise, but the timing was. For years, the UAE and Saudi Arabia have disagreed on oil production quotas. The UAE has for long preferred to hike production, while Saudi Arabia has preferred high prices to finance its public investments. The two have also fought in proxy conflicts in Yemen and Sudan. However, many believed that the current instability in the Middle East would have contributed to better relations between the countries, but clearly that is not the case.
In normal times, the UAE’s announcement would have roiled the markets. After all, it raises the question of whether this is the start of the end to the oil cartel. Throughout its 65-year lifetime, OPEC, has been challenged by internal rifts regarding production quotas and disobedience. In recent years, the UAE has not been the only discontent member. Currently, with the Strait of Hormuz closed and the UAE’s production almost halved, it is only able to export some 0.7Mb/d via the pipeline ending in Fujairah port. Hence, in the short term, the country’s departure from OPEC will not impact the markets. But once the SOH reopens and energy markets normalise, it has the capacity to produce more than 1.2Mb/d more than it did in February, which will help stabilise the market.
In this edition, we also discuss the US decision to withdraw 5,000 troops from Germany, the upcoming Xi-Trump meeting in the China section and North Korea’s announcement to drop reunification goal with South Korea.
Hurtige nyheder er stadig i beta-fasen, og fejl kan derfor forekomme.