How Will Increased Iranian Sanctions Affect South Africa - Guest Post

Refinery in Cape Town, South Africa (source: Wikipedia)
Guest post by John C.K. Daly of Oilprice.com

How Will Increased Iranian Sanctions Affect South Africa

The U.S. new sanctions initiative, strongly supported by Israel, to impose new sanctions against Iran, is designed to punish it for its purported covert nuclear weapons program by imposing new restrictions on Tehran.

As a result, many of Iran's oil customers are scrambling to avoid collateral damage to their economies.

The sanctions' potential fallout is now hitting South Africa, Africa's biggest economy, which receives nearly 25 percent of its needs from Iran, roughly 98,000 barrels per day (bpd), or about 4 percent of Iran's total exports.

South Africa's economy, which has been hit by fuel shortages in the past because of strikes and refinery problems, would be hard-pressed to fill any gap quickly.

IEA: Future Sanctions Already Severely Effect Iranian Oil Exports (With Export Map) - Guest Post

Source: GDS Infographics
Guest post by Joao Peixe of OilPrice.com

IEA: Future Sanctions Already Severely Effect Iranian Oil Exports

In the IEA’s monthly Oil Market Report they have said that the European and US trade sanctions designed to impede Iran’s nuclear program could affect far more than the 600,000 barrels per day (bpd) that the EU normally imports.

Canadian Prime Minister Shills Alberta Oil Sands in China - Guest Post

Western Canadian Sedimentary Basin (Wikimedia)
Guest post by John John C.K. Daly of OilPrice.com

Canadian Prime Minister Shills Alberta Oil Sands in China

Canadian Conservative Prime Minister Stephen Harper is in the midst of an official visit to China.
His mission?

To convince Beijing's mandarins to buy Canada's Alberta oil sands hydrocarbon production, now that Republican Congressional overreach has effectively sidelined the Keystone XL pipeline, designed to transit the oil to U.S. Gulf of Mexico refineries, for the foreseeable future.

Harper faces an uphill struggle, as China is questioning the delays in implementing the Northern Gateway pipeline, to transit Alberta's oil to Canada's western coast for transshipment to China.

Chart: 10y EFSF-German Bund Yield Spread; Moody's Affirms EFSF Aaa Rating, Stable Outlook

Moody's Investors Service "affirmed its provisional (P)Aaa long-term debt rating with a continued stable outlook for the debt issuance programme of the European Financial Stability Facility (EFSF)." It mentioned that it downgraded and lowered its outlook on Euro nations that are part of the EFSF's "guarantor pool" (France has 21.8%, Italy 19.2%, Spain 12.7%, and Austria 3%). Germany guarantees 29% of the fund. I found a Thomson Reuters chart (as of 2/14/2012) of the EFSF 10-year yield - German Bund yield spread and the 10y France -German Bund yield spread. The chart is here.


Source: Thomson Reuters Datastream

Moody's Lowers Outlook on UK, France; Downgrades Italy, Spain, Portugal; EUR/USD Hit

EUR/USD - freestockcharts.com
I know European sovereign debt downgrades are pretty much priced in, but today Moody's downgraded and lowered its outlook on a few European nations. It downgraded Italy to A3 from A2, Malta to A3 from A2, Portugal to Ba3 from Ba2, Slovakia to A2 from A1, Slovenia to A2 from A1, and Spain to A3 from A1 (two notches). All have negative outlooks. Moody's also lowered its outlook on France, Austria and the United Kingdom to negative. All are rated Aaa, which is the highest credit rating.

EUR/USD is trading lower at 1.31533, and is close to testing 10/4/2011 support again at 1.31460. The 50DMA is at 1.2998 on the chart. Since the UK is not really in the spotlight at the moment, here is the reasoning behind Moody's negative outlook.

"RATIONALE FOR NEGATIVE OUTLOOK

The primary driver underlying Moody's decision to change the outlook on the UK's Aaa rating to negative is the weaker macroeconomic environment, which will challenge the government's efforts to place its debt burden on a downward trajectory over the coming years. These challenges, reflecting the combined effect of a commodity price driven hit to real incomes, the confidence shock from the euro area and a reassessment of the lasting effects of the financial crisis on potential output, were already evident in the government's Autumn Statement. The statement announced that a further two years of austerity measures would be needed in order for the government to meet its fiscal mandate of achieving a cyclically adjusted current budget balance by the end of a rolling five-year time horizon, and to reach its target of placing net public sector debt on a declining path by fiscal year 2015-16.

Links on the Greek Austerity Vote, Protesting

Greece Set for Crucial Vote on Austerity (WSJ)
German Leaders Maintain Pressure as Greece Debates Budget Cuts (Bloomberg)
Time Starts Running Short to Avoid a Default by Greece (WSJ)
Greece set to defy protesters and accept eurozone bailout deal (Guardian)
Live Streams From Athens And Greek Parliament (Zero Hedge)
Athens buildings burn as lawmakers weigh austerity (Reuters)
UBS Asks: Has Greece Already Been Printing 'Quasi-Drachmas'?! (Business Insider)