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  • Iran Says It’s Reviving Oil Output to Pre-Sanctions Levels
    Bloomberg

    Iran Says It’s Reviving Oil Output to Pre-Sanctions Levels

    (Bloomberg) -- Iran has started ramping up its oil production and expects to reach pre-sanctions levels in one to two months, Deputy Oil Minister Amir Hossein Zamaninia said.The oil market will be able to accommodate Iran’s maximum oil output of around 3.9 million to 4 million barrels a day, Zamaninia told reporters on the sidelines of an oil conference in Tehran on Friday. Subject to punitive U.S. sanctions, the country is barely pumping around half that amount currently, according to Bloomberg data.Iran has been subject to tough U.S. sanctions since 2018, when the administration of then-President Donald Trump unilaterally withdrew from an international deal that restricted the Middle Eastern country’s nuclear activities.President Joe Biden is expected to seek the restoration of that accord and officials in Tehran have expressed the hope he will ease restrictions on its petroleum sales. But for now, the sanctions are still in place and any buyer of Iranian crude would face the same legal and financial penalties that have deterred most potential customers over the past few years.Zamaninia declined to specify the current level of Iran’s oil exports, but said the numbers were “much better than many assume,” while Oil Minister Bijan Namdar Zanganeh said shipments have increased “dramatically.” Oil analysts viewed the announcements with skepticism.“I find this premature,” said Eugen Weinberg, head of commodities research at Commerzbank AG in Frankfurt. “Possible buyers of Iranian oil are likely to wait for an agreement, and an end of the sanctions.”Sharply DownOutput stood at 1.99 million barrels a day in December, down by almost 50% compared with the months before Trump’s move, according to Bloomberg estimates. Many Iranian oil tankers switched off their transponders soon after the measures were announced, making it harder to quantify the impact on exports.Biden’s Treasury Secretary nominee Janet Yellen said Thursday that the U.S. would only provide sanctions relief if Iran resumed its commitments under the nuclear deal.Tehran, which has been ramping up its nuclear activity in defiance of U.S. pressure, has said it wouldn’t restore its compliance until sanctions are lifted. Announcing strong export levels and ambitious targets could be part of the negotiating process.Kpler Ltd., a market intelligence firm, said that Iran’s recovery will depend on three elements: the readiness of Biden to reactivate the nuclear deal, the country’s technical ability to revive production, and the willingness of customers to resume purchases.“Iran has demonstrated in the past a very strong ability to bring oil back to the market, although we think that one-to-two months is very optimistic,” said Alex Booth, Kpler’s head of research.China already showed some readiness to continue purchases from Iran even at the height of sanctions, and Indian customers could return too, Booth said. Production cuts by Iran’s counterparts in OPEC+, such as Saudi Arabia, may have created a gap for the Islamic Republic to fill, he added.Iranian output has been edging higher recently, analysts who track tanker loadings say. Petro-Logistics SA in Geneva estimates supplies have gained about 50,000 barrels a day in January, and SVB Energy International LLC sees an increase of about 36,000 a day. Oil Minister Bijan Namdar Zanganeh said in December that the government sought to double oil production and increase exports to 2.3 million barrels a day.Zamaninia, who is also Iran’s OPEC governor, said Tehran had been discussing energy projects, including upstream projects and oil purchases, over the past several weeks with European and Asian companies.“Iran’s bold claims on recovering oil exports in weeks don’t really stand up to scrutiny,” said Bill Farren-Price, a director at research firm Enverus. “But it does show that Iran is keen to test the U.S. commitment to the sanctions. Tehran just put nuclear diplomacy back on the front burner.”(Updates with recent output estimates in fourth-last paragraph.)For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2021 Bloomberg L.P.

  • Gold and Copper Climb as Dollar Weakens With Eyes on Inflation
    Bloomberg

    Gold and Copper Climb as Dollar Weakens With Eyes on Inflation

    (Bloomberg) -- Gold and copper surged as the dollar weakened amid signs that interests rates may remain low, boosting inflation expectations as Joe Biden begins his first day as U.S. president.The Bloomberg Dollar Spot index extended declines for a third straight day on Wednesday, supporting prices of commodities priced in the greenback. Stocks rose and bond yields tied to inflation expectations held gains from Tuesday, when Biden’s Treasury Secretary nominee Janet Yellen said that a slew of state spending was needed to fight the Covid-19 pandemic, while playing down concerns about the debt it creates.“Precious metals were supported above all by a weaker U.S. dollar, which fell further on the back of renewed strength for stock markets,” Fawad Razaqzada, a market analyst at ThinkMarkets, said in a note. “The path of least resistance is now to the upside again,” with gold trading above last week’s high and finding support above its 200-day moving average, he said.Yellen’s Tuesday testimony was key in weakening the dollar while lifting gold and base metal prices, according to Commerzbank analysts Carsten Fritsch and Daniel Briesemann. Copper had additional support on signs of greater risk appetite, the bank said. Industrial metals have been helped by expectations of increased Chinese and U.S. demand as Covid-19 vaccines continue to be be distributed and economies recover, ramping up spending on raw goods.“The metals prices are supported by the further rising stock markets, which express the high risk appetite of market participants,” Briesemann said. “This is fed by hopes that economic life will return to normal with the vaccinations that have now begun.”Biden became the 46th U.S. president in Wednesday’s inaugural ceremony that unfolded under heavy security after weeks of tumult and unrest stoked by Donald Trump. Next, traders will be looking toward the president’s ability to pass his economic stimulus plans through Congress, which would fuel another surge in metals demand in the U.S., the second-largest metals consumer after China.“All else being equal, a Biden presidency supported by control of the House and Senate, ought to be very favorable for gold,” Bryan Slusarchuk, chief executive officer of Fosterville South Exploration Ltd., said in an email.With Democratic leaders pushing for nearly $2 trillion in stimulus, there are “very big signals that the proverbial kitchen sink is about to be thrown at an effort to prop up a fragile economy, an effort that may have short-term impact but in the long term will cause further pain and ultimately will be negative for the U.S. dollar and positive for gold,” Slusarchuk said.Spot gold rose 1.7% to $1,871.84 an ounce by 5 p.m. in New York. Silver, platinum and palladium also pushed higher. Copper prices closed 1.1% higher at $8,044.50 a metric ton on the London Metal Exchange, with all major base metals rising. The Bloomberg Dollar Spot Index dropped 0.2%.(An earlier version of this story corrected location of timestamp)For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2021 Bloomberg L.P.

  • Gold Snaps Slump as Gains in the Dollar, Treasury Yields Recede
    Bloomberg

    Gold Snaps Slump as Gains in the Dollar, Treasury Yields Recede

    (Bloomberg) -- Gold headed for its first gain in five sessions as U.S. Treasury yields ebbed and the dollar declined, reviving demand for the metal as an alternative asset.The Bloomberg Dollar Spot Index fell as much as 0.6% on Tuesday, while long-end Treasury yields reversed their advance as a reopening sale of 10-year notes received a solid reception. Gold also got help from increasing inflation expectations as President-elect Joe Biden is set to release plans for a multitrillion-dollar stimulus package.Bullion has wavered in 2021 after posting the biggest annual gain in a decade on the back of the coronavirus crisis, vast stimulus and rising haven demand. Some analysts say the slump may prove temporary as virus aid and mending economies fuel inflation concern. The metal, which reached a record $2,075.47 an ounce last year, is often seen as a hedge against rising consumer prices.“We think the market will see a continued allocation into gold particularly as inflation risks are materializing,” Suki Cooper, a precious metals analyst at Standard Chartered Plc, said in an interview with Bloomberg Television Tuesday. “So we think over the course of the first quarter is when we’ll see a retest of that $2,000 point.”Spot gold rose 0.5% to $1,853.86 an ounce at 2:57 p.m. in New York after dropping as much as 0.3%. The four-session decline was the longest since November. Silver climbed 2.7%, while platinum and palladium also gained.One possible headwind for the gold market is the possibility of further gains in Treasury yields, which reduce demand for non-interest-bearing assets such as bullion. Federal Reserve officials are saying that more fiscal support and the distribution of vaccines may lead to a strong U.S. economic recovery in the second half of the year, setting the stage for a discussion about tapering of bond buying before year-end, and even an early rate hike.“This would be considerably earlier than previously expected, further fueling the upswing in yields,” Carsten Fritsch, an analyst at Commerzbank AG, said in a note. It remains to be seen whether early tightening is the majority view of the Fed, he said.For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2021 Bloomberg L.P.