Business News

CCTV Script 27/06/18

— This is the script of CNBC's news report for China's CCTV on June 27, 2018, Wednesday.

We know that oil priced declined as OPEC and Russia discussed the increase of production, after this stage, WTI jumped 3.6% in the overnight to $70/barrel. And that is also the 1st time in the past 2 months. The driving factor behind this is the "zero delay" principle implemented by the Trump administration on the U.S. sanctions against Iran.

The US State Department stated that before November 4th of this year that is, within 180 days after the United States withdrew from Iran’s nuclear agreement and resumed sanctions against Iran; companies importing crude oil from Iran must reduce the import amount to zero. This signal to the market is that the Trump administration does not intend to provide any exemption or extension on sanctions against Iran’s oil exports.

This kind of “One size fits all” policy is quite different from Obama’s policy which allowed allies to reduce 20% import amount per day. US delegation may visit countries such as India and so on in the following weeks, demanding them to reduce the imported crude amount to zero.  Currently, Iran is the 3rd biggest oil producer in OPEC, exporting crude oil about 2 million barrels per day, therefore, completely cutting the supply of this part caused the market to worry about crude oil supply and promoted a strong rise in oil prices overnight.

[Margaret Patel, SNR Portfolio Manager/MD, Wells Fargo Funds] "I think these other trends as far as Iran are really just pushing the fundemental demand and supply situation which is tightened up a lot more than people might have thought 6 or 12 months ago, so I think it looks pretty bright of oil prices to stay at this level or push a little bit higher."

At the same time, with the constant pressure from the United States, overseas banks that had previously maintained oil trade relations with Iran and overseas partners with investment intentions in Iran have been forced to cancel their businesses because of US sanctions.

[Patrick Pouyanné, TOTAL CEO] "We went into Iran because the JCPOA lifted the secondary sanctions from the U.S. and  it was not a single or international companies like total who can work in any country with secondary  sanctions. I cannot. I don't have a right to dicide. It's just the reality of the world. I know that my speech does not please some European leaders but you know at the end of the day you have to face the reality that the capital of the world today is the end of the U.S."

Meanwhile, Iran’s economic outlook is facing challenges; exchange rate of Iranian Riyal against the US dollar has once again set a record low, Riyal lost almost half value compare to that in 4 months ago. Devalued exchange rate and increasing inflation, as well as declined revenue of oil export before Dec this year, making Iran face a severe economic outlook and international political environment.