PVM Midday Report 13 June 2016
Headlines
OPEC hints at tighter oil balance in 2H 2016; output down 100,000 bpd in May
Chinese implied oil demand falls by 380,000 bpd in May y/y to 10.24 mbpd
Iran’s biggest oil…
We entered July wondering if Greece would agree a deal with the eurozone and if Iran would agree a deal with the P5+1 group. We exit the month with deals agreed but no feeling that the world is now a safer place economically or politically. The Greek deal is a charade which none of the participants believe will work. The participants in the Iranian deal are satisfied with their work but the deal has a daunting list of powerful opponents, ensuring that it will not make the Middle East a safer place.
Nobody believes, confirmed by statements from Ayatollah Khamenei, that Iran will change political direction or cease its role as a major sponsor of state terrorism. In the eyes of opponents Iran will now have more funding to continue and increase these activities whilst continuing with its nuclear aspirations, setting the scene for a Middle East nuclear arms race.
At the end of last week the IMF delivered a body blow to the prospects of a third Greek bail out with a leaked internal report advising against further participation unless Greece agrees to a comprehensive set of reforms and creditors agree to debt relief. So, we have Germany insisting on IMF participation in any new bail out; the IMF refusing to participate without debt relief; Germany refusing to consider debt relief; Greece refusing to put further reforms to parliament and Alex Tsipras threatening to call an election at any minute. Fancy a summer in Athens practicing your arbitration skills?
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