Honduras opens embassy in China after breaking off ties with Taiwan

BEIJING—Honduras opened an embassy in Beijing on Sunday, Chinese state media reported, months after the Central American nation broke off relations with Taiwan to establish diplomatic ties with China.

China’s Foreign Minister Qin Gang and his Honduran counterpart Enrique Reina took part in the inauguration of the embassy on Sunday morning, China’s official CCTV said. The report said Honduras still needed to determine the embassy’s permanent location and would increase its number of staff.

Qin pledged that China would establish a new model with Honduras of “friendly cooperation” between countries with different sizes and systems, according to a statement from China’s Foreign Ministry.

The symbol of the two sides’ strengthening diplomatic ties came during Honduran President Xiomara Castro’s six-day visit to China.

Honduras established formal relations with China in March, becoming the latest in a string of countries to break diplomatic ties with Taiwan. China sees selfgoverned Taiwan as a breakaway province, to be retaken by force if necessary, and prohibits its own diplomatic partners from having formal ties with Taipei.

The island also faces increasing military threats from Beijing.

Its defense ministry on Sunday reported that 10 Chinese warplanes crossed the median line of the Taiwan Strait, an unofficial boundary once tacitly accepted by both sides. In response, Taiwan deployed aircraft, naval vessels, and land-based missile systems.

Castro arrived in Shanghai on Friday on her first visit since the establishment of relations. During her stay in Shanghai, she visited the headquarters of the New Development Bank, a bank established by the BRICS nations, which includes Brazil, Russia, India, China and South Africa. Honduras requested admission to the bank, Castro’s office tweeted Saturday.

The president also visited a research center for technology giant Huawei before arriving in Beijing on Saturday night, China’s official Global Times newspaper reported.

The ties formed in March were a diplomatic victory for China amid heightened tensions between Beijing and the United States, including China’s increasing assertiveness toward Taiwan. It also signaled China’s growing influence in Latin America.

China and Taiwan have been locked in a battle for diplomatic recognition since they split amid civil war in 1949, with Beijing spending billions to win recognition for its “one China” policy. AP cut its outlook for consumption of the road fuel.

Those dynamics are, perhaps, part of why the cuts by Saudi Arabia and its Opec+ allies are having less of an impact.

“The producer group is in a multiple bind: demand is looking weaker and non-Opec supply stronger by year-end than many analysts had forecast,” Citigroup Inc. analysts including Francesco Martoccia wrote. “Both Opec and IEA forecasts have had an air of wishful thinking about accelerating demand growth.”

Sea flows

STUBBORNLY high oil flows are not helping.

While they have slipped in the past few months, observed seaborne oil shipments are still up sharply compared with where they were in May 2022, a month when Chinese buying was being undermined by the country’s efforts to contain Covid.

Tracking by Bloomberg shows shipments from the bulk of the world’s exporters were up 1.13 million barrels a day year on year. Russia’s cargoes, in particular, are soaring. The nation’s crude exports were within 100,000 barrels a day of a record in the four weeks to June 4, according to data compiled by Bloomberg.

That has led to torpor in the face of supply cuts. Likewise, markets for physical barrels are—for now at least—showing little sign of major tightness, though there’s still a month before Saudi Arabia’s cut takes effect. US crude oil was last week sold in Europe at the weakest in a month. Prior cuts by some members of Opec+ began in May.

Risky position

DESPITE all that, it’s far from a risk-free bet for the bears. With the kingdom effectively backstopping any decline in prices, some investors remain hopeful of meaningful market tightening in the second half of the year.

China’s Unipec bought oil from the US and Norway last week, a possible sign that Opec+’s moves will boost buying of cargoes in other markets and tighten them up. Indonesia’s PT Pertamina also plowed into the market, snapping up millions of barrels of West African oil.

Booming oil refining capacity in China and the Middle East looks set to come up against a “structural dearth of crude in the coming years,” Saad Rahim, chief economist of trading giant Trafigura Group, said in the company’s interim report.

The supply cuts by Opec+, coupled with emerging market demand growth, should lead to “material draws in inventories later this year,” he said, adding that US shale may not be able to balance the market.

But even if the market does turn, it may take time to filter through, as traders continue to wrestle with the slew of economic concerns and robust supplies that have hobbled prices for months now.

“No one wants to take risk in flat price given the macro uncertainty,” said Richard Jones, an analyst at consultant Energy Aspects. “Ultimately they are waiting to see physical markets tighten as the cuts take effect.” With assistance from Grant Smith, Yongchang Chin and Andrew Janes/Bloomberg

Pakistan welcomes first shipment of discounted crude from Russia

By Munir Ahmed The Associated Press

ISLAMABAD—The Pakistani government on Monday welcomed the arrival of the first shipment of discounted crude from Russia under a key deal between Islamabad and Moscow.

Prime Minister Shahbaz Sharif hailed it as a “fulfillment of promises” to the nation while Information Minister Marriyum Aurangzeb tweeted that it marked a “true service” for the people.

The cargo was being unloaded in the port city of Karachi, the country’s main hub for imports.

Cash-strapped Pakistan had been in talks with Russia to import discounted crude since February 2022, when former Pakistani Prime Minister Imran Khan visited Moscow to meet with President Vladimir Putin. Khan’s visit coincided with the start of Russia’s invasion of Ukraine—a visit that at the time strained relations between Pakistan and the United States.

Moscow has since grappled with Western sanctions over the war, rerouting much of its supply to India, China and other Asian countries at discounted prices after Western customers shunned it in response to the invasion.

Pakistan’s deputy oil minister, Musadiq Malik, told the Geo news TV that Islamabad had initially signed an agreement with Russia for the purchase of 100,000 tons of oil, which is supposed to arrive in two ships. The first vessel with the crude arrived in Karachi on Sunday. The size of its cargo load was not immediately known.

He did not share any details about the price of Russian oil, saying only that Pakistan will try to ensure a steady import with the expectations that prices at the pump will decrease.

“If we start getting one-third of our crude oil from Russia, then there will be a big difference in prices and its effect will reach people’s pockets,” Malik said.