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OPEC sticks to oil demand view despite virus, sees more US shale coming
12 August 2021, 3:03 PM

OPEC on Thursday stuck to its prediction of a strong recovery in world oil demand in 2021 and further growth next year, despite concerns about the spread of the Delta coronavirus variant that has weighed on prices.

The Organization of the Petroleum Exporting Countries in a monthly report also raised its forecast of supply from rivals, including US shale producers, next year, a potential headwind for the efforts of the group and allies to balance the market.

“The global economy continues to recover,” OPEC said in the report. “However, numerous challenges remain that could easily dampen this momentum. In particular, COVID-19-related developments will need close monitoring.”

OPEC’s view that demand will shrug off the latest pandemic-related setback contrasts with that of the International Energy Agency, which trimmed its outlook on Thursday. The US government’s forecaster also kept its 2021 growth forecast steady, but trimmed that for 2022.

Oil demand will rise by 5.95 million barrels per day (bpd) this year, or 6.6%, unchanged from last month’s forecast, OPEC said in the report. In 2022, fuel use will expand by 3.28 million bpd, OPEC said, also unchanged.

Oil was trading above $71 a barrel after the report was released. Prices have risen to pre-pandemic highs above $77 this year, boosted by economic recovery hopes and OPEC+ supply cuts, although concern about the Delta variant has weighed.

OPEC raised its forecast of 2021 world economic growth to 5.6% from 5.5% assuming the impact of the pandemic will be contained, although it warned of “significant uncertainties”. The outlook for 2022 was raised by the same increment to 4.2%.

“The path of the COVID-19 pandemic will be the overarching factor impacting the near-term pace of the recovery, with the potential emergence of new COVID-19 variants and/or mutations posing a particular risk,” OPEC said.

SHALE REBOUND SEEN

The report showed higher output from OPEC and forecast more supplies from rivals in 2022, including U.S. shale producers.

OPEC and its allies, known as OPEC+, are gradually unwinding record oil output cuts put in place last year when the pandemic hit demand. In July, they agreed to gradually boost output by 400,000 bpd a month from August.

The report showed OPEC output rose in July by 640 000 bpd to 26.66 million bpd, as Saudi Arabia unwound the rest of a voluntary supply cut it had made to support the market.

The report forecast a 2.9 million bpd rise in supply from OPEC’s rivals in 2022, 840 000 bpd more than seen last month, partly because of the decision by OPEC+ to pump more and as higher prices spur investment.

OPEC sees output of US tight oil, another term for shale, rising by 560 000 bpd in 2022, up 60 000 bpd from last month’s forecast, after a contraction this year.

“In the US, operators have remained highly disciplined in 2020-2021,” OPEC said. “Nevertheless, rig count continue to rise, more wells are being fracked and more frac crews are deployed, as firms are again flush with free cash flow.”

The extra barrels will limit growth in demand for OPEC crude next year. OPEC sees the world needing 27.6 million bpd from its members, down 1.1 million bpd from last month but still, in theory, allowing for higher OPEC production.

Facebook may have to sell GIF-maker Giphy on UK competition concerns
12 August 2021, 2:58 PM

Britain might require Facebook to sell GIF website Giphy after the country’s competition regulator said on Thursday its investigation found the deal between the two companies would hurt the display advertising market.

Facebook, the world’s largest social media company, bought Giphy, a website for making and sharing animated images, or GIFs, in May last year to integrate it with its photo-sharing app, Instagram. The deal was pegged at $400 million by Axios.

The UK’s Competition and Markets Authority (CMA) began a probe into the deal in January, and in April referred the deal to an in-depth investigation.

“Giphy’s takeover could see Facebook withdrawing GIFs from competing platforms or requiring more user data in order to access them. It also removes a potential challenger to Facebook,” said Stuart McIntosh, chair of the independent investigation for the CMA.

Another major provider of GIFs is Google’s Tenor.

The CMA found that, before the Facebook deal, Giphy was considering expanding its paid advertising services offered in the United States to other countries, including the UK. However, Facebook terminated Giphy’s ad partnerships following the deal, according to the regulator.

“We disagree with the CMA’s preliminary findings, which we do not believe to be supported by the evidence. As we have demonstrated, this merger is in the best interest of people and businesses in the UK – and around the world,” a Facebook spokesperson said.

The representative added that the California-based company would continue to work with the CMA. Giphy declined to comment.

This is not the first time the CMA has raised concerns about major deals. The $9.2 billion eBay-Adevinta deal has caught its attention, and the CMA has asked the new owners of supermarket chain Asda to fix fuel competition concerns.

The watchdog said that it has engaged with other agencies reviewing the deal to help the CMA’s investigation, and is now inviting comments from interested parties by Sept. 2 for its provisional findings.

Italian wildfires rage on after 49 degree heat record
12 August 2021, 12:05 PM

Fires stoked by hot winds swept through southern Italy on Thursday, a day after a monitoring station in Sicily reported temperatures of 48.8 Celsius (119.84°F) which some scientists believe could be the highest in European history.

The record temperature, which still needs to be verified by the World Meteorological Organization (WMO), was reported close to the city of Syracuse, in the southeast of the island of Sicily.

“If the data is validated, it could become the highest value ever recorded in Europe, beating the previous record of 48 degrees measured in Athens on July 10, 1977,” meteorologist Manuel Mazzoleni wrote on 3Bmeteo.com, a specialist website.

Firemen said on Twitter they had carried out more than 500 operations in Sicily and Calabria in the last 12 hours, employing five planes to try to douse the flames from above. They said the situation was now “under control” on the island.

Local media reported that trees and land were burning in the Madonie mountains some 100 km from the Sicilian capital of Palermo and in the small town of Linguaglossa, on the slopes of the Etna volcano.

“Our small town was really invaded by fire. It is a catastrophe … We are living through some really sad moments,” said Giovanna Licitra, from the village of Giarratana in the south of the island which was hit by fires on Wednesday.

Serious damage has also been reported in Calabria, the toe of Italy’s “boot”, where some families left their homes and a man died on Wednesday.

Temperatures are expected to rise in several Italian cities including the capital Rome on Friday, when the heatwave could reach its peak, according to a health ministry bulletin.

Indonesia to investigate forcible restraint of Nigerian diplomat
12 August 2021, 11:58 AM

Indonesia’s foreign ministry expressed its regret on Thursday after a senior Nigerian diplomat was forcibly restrained by immigration officers in Jakarta, prompting the African country to recall its ambassador to Abuja for consultations.

A video of the incident, widely shared on social media and sparking outrage among users, shows the visibly distressed man being restrained inside a vehicle by several men.

“I can’t breathe,” he says at one point in the video, yelling out as his head is pinned to the seat.

The Nigerian foreign ministry described the man as an “accredited Nigerian diplomatic agent” at the Nigerian embassy in Jakarta without revealing his name.

Indonesian foreign ministry spokesperson Teuku Faizasyah said on Thursday the ministry regretted the Aug. 7 incident, and was continuing to communicate with the Nigerian government on the matter.

“That incident was an isolated incident and does not have anything to do with Indonesia’s commitment to performing its duties as a host country as per Vienna conventions on diplomatic relations,” he said.

“The law and human rights ministry has launched an internal investigation as a follow up to that incident.”

The Nigerian Foreign Minister Geoffrey Onyeama strongly condemned the incident, calling it “an egregious act of international delinquency by Indonesian state actors”.

“The Nigerian government demands appropriate sanctions against the relevant officials and has recalled its ambassador in Indonesia for consultations, including a review of bilateral relations,” Esther Sunsuwa, a foreign ministry spokesperson, said in a statement on Wednesday.

Indonesia’s immigration office defended the actions of its officers, saying the diplomat had been “uncooperative” when questioned in front of a Jakarta apartment.

Ibnu Chuldun, the head of the Jakarta law and human rights agency that oversees immigration, told a streamed news conference on Thursday the diplomat had refused to show his identity cards and subsequently attempted to break the car window with an e-cigarette when apprehended, causing an injury to one officer.

“Immigration has launched an internal coordination to improve on the operational standards when taking action and monitoring on foreigners,” he said.

Zambia starts voting in presidential election seen too close to call
12 August 2021, 10:22 AM

Zambians started voting on Thursday in a showdown between President Edgar Lungu and main opposition rival Hakainde Hichilema that looks too tight to call and comes amid mounting debt and a flagging economy.

Polling opened at 6 a.m. (0400 GMT) with long queues seen at voting booths in the capital Lusaka, which could point to a huge turnout in Africa’s No. 2 copper producer.

At a voting station in the Kabwata suburb of Lusaka, first time voter Ben Mulenga, 19, said he had arrived two and half hours before voting started because he anticipated long queues.

“The things that are happening in our country, including the bad state of the economy and the high levels of unemployment need to be addressed,” said Mulenga, a student at the University of Zambia.

Lungu was among the earliest voters, having brought forward his voting time. Wearing a black leather jacket and a white face mask, Lungu, accompanied by his wife, waved to a cheering crowd as he left in his motorcade.

“We are winning, otherwise I wouldn’t have been in the race if we were not winning,” Lungu told reporters shortly after he voted at a polling station in the Chawama township in Lusaka.

Some 54% of registered voters are 34 or younger, statistics from the Electoral Commission of Zambia (ECZ) show.

That could help Hichilema, who is facing Lungu for the third time and has placed the economy front and centre of his campaign, political analysts said.

In November, Zambia became the first African state to default on part of its debt during the coronavirus pandemic. It will be among the continent’s slowest growing economies this year, the International Monetary Fund (IMF) estimates.

Zambia owes in excess of $12 billion to external creditors and spends 30%-40% of its revenues on interest payments on its debt, credit rating firm S&P Global estimates.

In office since 2015, 64-year-old Lungu narrowly defeated Hichilema, the CEO of an accountancy firm before entering politics, in a disputed election the following year.

The president has touted the new road, airport and energy projects he has overseen as laying the groundwork for economic development and growth.

His push for greater state control over the mining sector – an approach that has sparked fears of resource nationalism among international investors – will create jobs, he says.

“The challenge we have is the economy and we are doing our best to ensure that the challenge is faced head on,” Lungu said during his final virtual campaign rally on Wednesday.

But so far his debt-financed infrastructure splurge has failed to pay economic dividends, and unemployment remains high.

That has left him open to attack from Hichilema.

“So much money was borrowed at a very high cost and this is frustrating development efforts,” Hichilema, popularly known as HH, told a news conference on Wednesday.

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