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Oil dispute sharpens Baghdad-Kurd tensions amid deadlock



Iraq, the second largest producer in the Organization of the Petroleum Exporting Countries, sits on enormous oil reserves, and revenues from the sector feed 90 percent of the federal government budget
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Iraq’s oil wealth is rekindling tensions between federal authorities and the autonomous Kurdish region, in a row that could compromise the lifeline industry and keep investors away, analysts say.

The long-simmering dispute came to a head in February — at a time of political deadlock in Baghdad — when the federal supreme court ordered Kurdistan to hand over oil extracted from its territories to the federal authorities.

Then earlier this month, a commercial court in the Iraqi capital annulled contracts between the Kurds and foreign firms, after the oil ministry in Baghdad filed a judicial complaint.

Authorities in the Kurdistan capital Arbil have cried foul, accusing Baghdad of heaping “unjust pressure” on them and announcing their own legal action.

Iraq, the second largest producer in the Organization of the Petroleum Exporting Countries, sits on enormous oil reserves, and revenues from the sector feed 90 percent of the federal government budget.

It exports an average of 3.3 million barrels of crude oil per day (bpd), while production in Kurdistan amounts to just over 450,000 bpd.

The February ruling stated that a 2007 law adopted by Arbil to regulate oil and gas was unconstitutional.

But analysts say politics play a major role in the dispute in Iraq, whose political barons have failed to reach agreement on choosing a president and a prime minister since October legislative elections.

“When it comes to oil, each side uses their respective powers as carrots and sticks depending on the political atmosphere of the day,” said Bilal Wahab of The Washington Institute for Near East Policy.

“At times when there was political accord, the courts were rather quiet. When there was political discord, however, the reverse was true,” he told AFP.

– ‘Reputation being damaged’ – 

The nullification of oil contracts between the Kurds and four international oil companies (IOCs) from Canada, Britain, Norway and the United States at the start of July has inflamed the row.

“For Baghdad to be chasing IOCs out of Iraqi Kurdistan does not serve to show Iraq as a major producer welcoming of foreign investment,” cautioned Yesar al-Maleki, an analyst at the Middle East Economic Survey.

In a fightback, the Kurdish regional authorities in June initiated judicial proceedings against the federal government.

One lawsuit targets Oil Minister Ihsan Ismail, accused by the Kurds of trying to “intimidate” foreign firms operating in the Kurdistan region of northern Iraq.

The Kurdish autonomous government has accused Baghdad of taking “illegal” and “politically motivated” actions.

For Wahab, Kurdish and federal government officials fail to appreciate “how much they are damaging the overall reputation of Iraq’s energy industry”.

“Questioning the sanctity of contracts … adds legal risk to a slew of other regulatory and governance risks that ail the Iraqi energy industry,” he added.

The dispute, he said, “repels much-needed foreign investment”.

Oil revenues are critical for Iraq, a country faced with widespread corruption but also mired in a financial crisis and in need of funds to rebuild infrastructure after decades of conflict.

– ‘Compromise’? –

Despite the legal actions, Kurdistan says it is open to a negotiated solution.

It is working on setting up two companies specialised in oil exploration and marketing that would coordinate with Baghdad, a spokesperson for the Arbil government said.

Baghdad’s oil ministry, meanwhile, marked a small victory after oil giants Baker Hughes, Halliburton and Schlumberger committed not to initiate new projects in Kurdistan.

The ministry says the companies are also working to “liquidate and close” existing contracts.

Baghdad has fought to regain control of output from lucrative oil fields in Kurdistan since the autonomous region began marketing oil independently more than a decade ago.

But under a current deal, the Kurdish region delivers 250,000 barrels per day to Baghdad, in return for a share of federal funds to pay the salaries of Kurdish civil servants.

In recent weeks, tensions have risen further after a series of unclaimed rocket attacks targeting oil and gas installations in Kurdistan.

Experts say the assaults aim to put pressure on the Kurdistan Democratic Party (KDP), the largest in Kurdistan. 

The KDP is allied to Shiite leader Moqtada Sadr, whose bloc won 73 seats in the October polls, making it the largest faction in the 329-seat parliament.

The party is eyeing the Iraqi presidency for one of its members, although traditionally the job has been held by a member of the rival Patriotic Union of Kurdistan.

“The timeline of events evidently shows that this whole crisis started because the KDP took the side of the Sadrist movement… opposing the Iran-backed Shiite Coordination Framework,” Maleki said.

He expects a “compromise” will be reached to resolve the oil dispute because “Iraq is a country of compromise”.

“Until then, the supreme court ruling will hang like the sword of Damocles over the Kurdish regional government,” he said.

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‘Thor’ rules again at North American box office




The comedic follow-up to 2017's "Thor: Ragnarok," "Thor: Love and Thunder", stars a muscle-clad, self-parodying Chris Hemsworth as the space viking who wields the mallet Mjolnir
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Marvel’s latest superhero flick “Thor: Love and Thunder” pounded opponents for a second straight week to top the North American box office with an estimated $46 million haul, industry watcher Exhibitor Relations reported Sunday.

The comedic follow-up to 2017’s “Thor: Ragnarok” stars a muscle-clad, self-parodying Chris Hemsworth as the space viking who wields the mallet Mjolnir, but also finds himself pining for his ex-girlfriend Jane Foster (Natalie Portman), whose help he enlists to battle god butcher Gorr (Christian Bale).

The take was down sharply from its $144 million debut last weekend, but Thor still easily beat out “Minions: The Rise of Gru,” which scored second spot for the second straight week after a phenomenal opening weekend over the July 4th holiday. 

The latest goofy installment in Universal’s animated “Despicable Me” franchise about the reformed super-villain Gru and his yellow Minions took in $26 million in the Friday-to-Sunday period.

Third place went to “Where the Crawdads Sing,” the adaptation of Delia Owens’ novel about an abandoned girl who grows up in marshland of 1950s and 60s North Carolina and, at a murder trial years later, looks back on that rough and violent upbringing. The take was $17 million.

“This is a very good opening for a movie that combines young adult romance and suspense crime drama. Where the Crawdads Sing’s weekend number is above average, in spite of weak reviews,” said analyst David A. Gross of Franchise Entertainment Research.

“These films have never been strong overseas, and that will be the case here as well,” he added.

Dropping from third to fourth was Paramount’s “Top Gun: Maverick,” the crowd-pleasing sequel to the original 1986 film that once again features Tom Cruise as cocky US Navy test pilot Pete “Maverick” Mitchell.

The fighter ace feature, in its eighth week in theaters, has now grossed $618 million worldwide.

Baz Luhrmann’s music biopic “Elvis” — starring Austin Butler as the King alongside Tom Hanks as his exploitative manager, Colonel Tom Parker — slipped one spot to fifth in the Warner Bros film’s fourth weekend of release, at $7.6 million.

Another movie making its debut — Paramount’s animated comedy “Paws of Fury: The Legend of Hank” — scored a haul of $6.3 million for sixth place. It tells the tale of a hapless dog who is assigned to protect a village of cats.

Completing the top 10 were:

“The Black Phone” ($5.3 million)

“Jurassic World: Dominion” ($4.95 million)

“Mrs Harris goes to Paris” ($1.9 million)

“Lightyear” ($1.3 million)

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What’s next for the euro after slump against dollar?




The euro fell below parity for the first time in two decades last week, but believe it could rebound once worries about gas supplies and inflation subside
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The euro’s plunge against the dollar, triggered by the Ukraine war and mounting risks to the EU economy, has driven the two currencies to parity for the first time in two decades.

The European single currency sank to $0.9952 on Thursday — a level not seen since the end of 2002, the year it was officially introduced.

But traders believe the euro could recover, provided it clears several hurdles in the coming months. 

The first to get over is to avoid the risk of a halt in Russian gas supplies to Europe, which would cause electricity prices to soar and force eurozone countries to limit some industrial activity. 

“If gas flows from Russia normalise, or at least stop falling, following the end of the Nord Stream 1 maintenance shut-down next week, this should somewhat decrease market fears of an imminent gas crisis in Europe,” Esther Reichelt, an analyst at Commerzbank, told AFP. 

With Russian gas giant Gazprom having warned it cannot guarantee that the pipeline will function properly, European countries fear that Moscow will use a technical reason to permanently halt deliveries and put pressure on them. 

French President Emmanuel Macron even said on Thursday that Russia was using energy “as a weapon of war”. 

If Nord Stream 1 “doesn’t turn back on, the euro falls as the economic shock waves will be felt worldwide as the European energy crisis could very well trigger a recession,” warned Stephen Innes, an analyst at SPI Asset Management. 

– ECB wake-up call –

“Recession would inevitably mean that the market becomes even more concerned about fragmentation risks in the eurozone,” added Jane Foley, a foreign exchange specialist at Rabobank. 

Like other central banks, the European Central Bank (ECB) is seeking to avoid stifling the economy by raising rates too sharply. 

But it also has to worry about a possible fragmentation of the debt market, with large differences in borrowing rates across the eurozone. 

The ECB has so far maintained an ultra-loose monetary policy to support the economy, while the US Federal Reserve has instead raised rates and promises to continue to do so to counter inflation. 

It will announce its monetary policy decision on Thursday, and has indicated that it will raise rates for the first time in 11 years. 

“If the ECB is aiming to give the euro a boost, it will have to deliver a 50-bp hike in July and/or signal that 75-bp moves are on the cards for September,” S&P analysts said in a note. 

“Speedier policy adjustments now would help anchor inflation expectations, reducing the risk of needing a restrictive policy stance further down the line,” they added. 

– Fed slowdown –

For economists at Berenberg, the euro’s fall is more attributable to the strength of the dollar, which has “appreciated strongly against a broad basket of currencies since mid-2021”. 

The dollar has benefited from the Fed’s tightening of monetary policy as it tries to limit inflation, which hit record highs again in June. 

“Markets are speculating that the Fed may raise rates by 100bp instead of 75bp at its next meeting on 27 July,” noted Berenberg.

“If so, this could strengthen the dollar further.”

UniCredit added: “Towards year-end, prospects of declining inflation and more-balanced messaging from central banks as the cyclical peak of official rates nears should support a return of risk appetite and ease USD demand.”

Should that happen, the euro could move away from parity in the last few months of 2022, they say. 

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G20 finance talks to end without joint communique: officials




Indonesia will issue a declaration at the end of talks instead of a communique, officials said
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A two-day meeting of G20 finance ministers in Indonesia is expected to end Saturday without a joint communique, two officials said, after Russia’s war in Ukraine overshadowed proceedings.

During talks on the Indonesian resort island of Bali, finance chiefs from Western nations accused Russian technocrats of complicity in the invasion.

US Treasury Secretary Janet Yellen and Australian Treasurer Jim Chalmers on Friday blamed the invasion for sending a shockwave through the global economy.

In place of a formal communique will be a statement by Indonesia, which holds the G20 presidency, said one official who spoke on condition of anonymity.

Another source at the meeting said the host would summarise the talks in a declaration that would not fall under the G20 banner.

Indonesian officials did not respond to a request for comment.

At the beginning of the second day of talks, Indonesian central bank governor Perry Warjiyo called on ministers and global finance leaders to concentrate on recovery in a world economy still reeling from the Covid-19 pandemic.

“It is important that we remain focused on what we have planned to achieve this year, as this will also send a positive message to the global community on the G20’s role and efforts to support global recovery,” Warjiyo said.

But the talks have been under the shadow of the Ukraine war — which Russia calls a “special military operation” — after it roiled global markets, caused rising food prices and added to breakneck inflation.

It has left the forum unable to agree on a text with Russia disagreeing with Western nations over its invasion of Ukraine being the cause of the global economic headwinds.

The Kremlin instead blames subsequent Western sanctions for blocked food shipments and rising energy prices.

“Russia tried to say that the world economic situation had nothing to do with the war,” a French delegation source told AFP on Friday.

Russian Finance Minister Anton Siluanov and Ukrainian Finance Minister Serhiy Marchenko participated virtually in the meeting.

Russian Deputy Finance Minister Timur Maksimov attended the talks in person.

He was in the room as Western officials expressed their condemnation, according to a source present at the talks.

Marchenko said the Russian invasion “clearly marks the end of the existing world order”, and called for “more severe targeted sanctions” against Moscow.

Members will also discuss sustainable finance, cryptocurrencies and international taxation on Saturday.

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