Issue link: https://maltatoday.uberflip.com/i/541394
maltatoday, WEDNESDAY, 15 JULY 2015 11 Business Today Oil prices have fallen after a deal was reached with Iran on limiting its nuclear activity in return for the lift- ing of economic sanctions. News of the deal sent the Brent crude price down $1.15 to $56.70 a barrel, while US crude fell $1.05 to $51.15. The lifting of sanctions is expected to see a surge in Iran's oil output. Iran could increase its oil exports by up to 60% within a year, according to a survey of 25 oil analysts questioned by the Reuters news agency. Twelve of those polled believe Iran could raise oil output by up to 250,000 barrels per day in the first six months, while eight others predicted it could increase by as much as 500,000 barrels. Nuclear inspectors will want to verify Iran's compliance with the terms of the deal before lifting sanctions, but the country's Oil Minister Bijan Zanganeh is confident the country can reach full capacity quickly. Sarosh Zaiwalla, a London-based lawyer specialising in sanctions, said there was huge excitement, despite the potential problems ahead. "Sanctions have crippled Iran's oil production, halving oil exports and severely limiting new development projects. "Foreign trade and investment will allow Iran to make huge efficiencies and drive down the cost of production." Edward Morse, global head of commodities research at Citi in New York, said that after years of underinvestment there would be a long delay before exports reached their full potential. "Sanctions have clearly impaired Iran's ability to maintain its mostly mature oilfields, let alone develop new projects," he said. It is predicted that even a modest initial increase in output will pull international oil prices down further as the market is already producing around 2.5 million barrels per day above demand. Amrita Sen, chief oil analyst at London-based consultancy, Energy Aspects said, "Given how oversupplied the market is with Saudi output at record highs, the mere prospect of new oil will be bearish for sentiment." www.creditinfo.com.mt info@creditinfo.com.mt Tel: 2131 2344 Your Local Partner for Credit Risk Management Solutions Supporting you all the way Oil prices fall following Iran nuclear deal Gatwick: Heathrow expansion 'unfair' Gatwick Airport has described the Airports Commission's choice of a new runway at Heathrow as "un- fair". Airport chairman Sir Roy McNulty said its predicted passenger figures for Gatwick were "10 years out". In his first detailed response since the commission's report, he said that meant the economic case was "flawed". He also told the BBC that "we have not considered a judicial review at this stage", but he did not rule out legal action in the future. The report said that Heathrow would make a lot more money for the economy. The Gatwick chairman said he had been raising objections for the past two years, but the final report, published earlier this month, had still ignored them. In a statement, Gatwick said the report by the independent commission, chaired by Sir Howard Davies, was "flawed". Out of three possible choices on the table, the commission backed the idea of building a new third runway at Heathrow, at a cost of £18.6bn. An expansion of Gatwick was also on the table, at a cost of £9.3bn. Gatwick 'best option' Sir Roy said: "The many strengths of Gatwick and the many challenges of Heathrow are underplayed, leading to a conclusion which we believe is flawed. "We are confident that when they [the government] do make their decision, they will choose Gatwick as the best option for the economy and the environment, and - most importantly - after decades of delay, the option that is actually deliverable." In June, Gatwick reported that it had the busiest year in its history, while Heathrowreported its busiest June on record. Heathrow also stated: "The commission found that Heathrow's new plan for expansion can be delivered while reducing local and environmental impacts and that expansion at Heathrow is the only solution which can help British businesses compete for global growth, and support a truly national recovery built on exports, skills and investment." The government should make a final decision before Christmas. Money Market Report for the week ending July 10, 2015 ECB Monetary Operations On Monday, July 6, the European Central Bank (ECB) announced its weekly main refinancing operation (MRO). The auction was conducted on Tuesday, July 7, and attracted bids from euro area eligible counterparties of €74.46 billion, €1.95 billion lower than the bid amount of the previous week. The amount was allotted in full at a fixed rate equivalent to the prevailing MRO rate of 0.05%, in accordance with current ECB policy. On Wednesday, July 8, the ECB conducted a seven-day US dollar funding operation through collateralised lending in conjunction with the US Federal Reserve. This operation attracted bids of $0.31 billion, which was allotted in full at a fixed rate of 0.63%. Domestic Treasury Bill Market In the domestic primary market for Treasury bills, the Treasury invited tenders for 90-day bills maturing on October 8, 2015. Bids of €38.00 million were submitted, with the Treasury accepting €25.00 million. Since no bills matured during the week, the outstanding balance of Treasury bills increased by €25.00 million, to stand at €247.55 million. The yield from the 90-day bill auction was -0.025%, down by 2.2 basis points from bids with a similar tenor issued on July 3, 2015, representing a bid price of 100.0063 per 100 nominal. During the week under review, there was no trading on the Malta Stock Exchange. On Tuesday the Treasury invited tenders for 90-day and 272-day bills maturing on October 15, 2015 and April 14, 2016.