Group of 14 US-Sanctioned Iraqi Banks Warn of ‘Negative Consequences’

Iraqi activists in front of the Central Bank in Baghdad demand economic reforms (EPA)
Iraqi activists in front of the Central Bank in Baghdad demand economic reforms (EPA)
TT

Group of 14 US-Sanctioned Iraqi Banks Warn of ‘Negative Consequences’

Iraqi activists in front of the Central Bank in Baghdad demand economic reforms (EPA)
Iraqi activists in front of the Central Bank in Baghdad demand economic reforms (EPA)

A group of 14 private Iraqi banks sanctioned by the US Treasury Department warned of "negative consequences" by depriving them of dealing in dollars.

The 14 banks have been banned from undertaking dollar transactions but can continue to use Iraqi dinars and other foreign currencies.

The sanctioned banks said in a joint statement that they deal in dollars with the Central Bank, under the supervision of the US Federal Reserve, and will apply the best auditing standards and investigation of financial transactions.

They said they were ready to challenge the measures and face audits through the Central Bank or an international auditing firm, asserting they'd take full responsibility for any violations if committed.

The statement noted that depriving about a third of Iraqi private banks of dealing in dollars will have negative consequences, not only on the value of the Iraqi dinar against the US dollar, but it will have a significant impact on foreign investments.

They called on the Iraqi government to take all measures to solve this problem and bear the losses they incurred and the banking sector in general.

The United States uncovered information that the Iraqi banks engaged in money laundering and fraudulent transactions, some of which may have involved sanctioned individuals, and raised concerns that Iran could benefit.

An economics professor at al-Basra University, Nabil al-Marsoumi, issued Wednesday data on the number of private banks in Iraq, saying they exceed that of countries such as Britain which has 54 banks only.

Marsoumi reported that the total number of banks in Iraq is 81, including 74 private banks, saying the ratio of public to private banks is the highest in the Middle East, with 43 in Turkey, 41 in Egypt, 31 in Saudi Arabia, 30 in Iran, 26 in Jordan, and 20 in Algeria.

Iraq has 29 Islamic banks, constituting more than a third of the banks in the country, said the expert.

Marsoumi hinted that political groups and parties control most banks.

Meanwhile, dozens demonstrated in front of the Central Bank in Baghdad to protest the sharp decline in the exchange rates of the Iraqi dinar against foreign currencies and chanted against the governor and some political parties and figures, accusing them of manipulating the exchange rates.

The Iraqi dinar reached 1,600 per US dollar in the local markets, compared to an official exchange rate of 1,320 dinars.

Furthermore, independent MP Hadi al-Salami officially requested the dismissal of the governor of the Central Bank, Ali al-Alaq.



OPEC Again Cuts 2024, 2025 Oil Demand Growth Forecasts

The OPEC logo. Reuters
The OPEC logo. Reuters
TT

OPEC Again Cuts 2024, 2025 Oil Demand Growth Forecasts

The OPEC logo. Reuters
The OPEC logo. Reuters

OPEC cut its forecast for global oil demand growth this year and next on Tuesday, highlighting weakness in China, India and other regions, marking the producer group's fourth consecutive downward revision in the 2024 outlook.

The weaker outlook highlights the challenge facing OPEC+, which comprises the Organization of the Petroleum Exporting Countries and allies such as Russia, which earlier this month postponed a plan to start raising output in December against a backdrop of falling prices.

In a monthly report on Tuesday, OPEC said world oil demand would rise by 1.82 million barrels per day in 2024, down from growth of 1.93 million bpd forecast last month. Until August, OPEC had kept the outlook unchanged since its first forecast in July 2023.

In the report, OPEC also cut its 2025 global demand growth estimate to 1.54 million bpd from 1.64 million bpd, Reuters.

China accounted for the bulk of the 2024 downgrade. OPEC trimmed its Chinese growth forecast to 450,000 bpd from 580,000 bpd and said diesel use in September fell year-on-year for a seventh consecutive month.

"Diesel has been under pressure from a slowdown in construction amid weak manufacturing activity, combined with the ongoing deployment of LNG-fuelled trucks," OPEC said with reference to China.

Oil pared gains after the report was issued, with Brent crude trading below $73 a barrel.

Forecasts on the strength of demand growth in 2024 vary widely, partly due to differences over demand from China and the pace of the world's switch to cleaner fuels.

OPEC is still at the top of industry estimates and has a long way to go to match the International Energy Agency's far lower view.

The IEA, which represents industrialised countries, sees demand growth of 860,000 bpd in 2024. The agency is scheduled to update its figures on Thursday.

- OUTPUT RISES

OPEC+ has implemented a series of output cuts since late 2022 to support prices, most of which are in place until the end of 2025.

The group was to start unwinding the most recent layer of cuts of 2.2 million bpd from December but said on Nov. 3 it will delay the plan for a month, as weak demand and rising supply outside the group maintain downward pressure on the market.

OPEC's output is also rising, the report showed, with Libyan production rebounding after being cut by unrest. OPEC+ pumped 40.34 million bpd in October, up 215,000 bpd from September. Iraq cut output to 4.07 million bpd, closer to its 4 million bpd quota.

As well as Iraq, OPEC has named Russia and Kazakhstan as among the OPEC+ countries which pumped above quotas.

Russia's output edged up in October by 9,000 bpd to about 9.01 million bpd, OPEC said, slightly above its quota.