The fear is that Iran would disrupt its oil exports, leading to rocketing oil prices.

The United States accuses Tehran of using a nuclear energy programme as cover for a drive to make atomic weapons, and has expressed confidence that the UN Security Council can agree economic sanctions in September.

Iran denies the US charges and argues that its nuclear programme is purely to provide civilian nuclear energy.

Meanwhile, the price fall has received support from unexpected jump in US energy inventories. The US Department of energy revealed that US supplies of crude oil, gasoline and other refined products grew over the past week. These are likely to add further downward pressure on prices, as a market unaffected so far this year by hurricanes seems well supplied going in to the winter.

Iran failed to meet an August 31 deadline to halt its enrichment programme or run the risk of UN sanctions.

The United States has led the call for sanctions, which analysts fear could lead Iran to disrupt oil flows in retaliation. The European Union has said it wants more talks.

Despite the fall from record levels, oil prices are still historically high. As a result the Organization of the Petroleum Exporting Countries (Opec), which meets in Vienna on September 11, to reconsider its output policy, is expected to continue pumping at close to capacity.

A significant decline in demand for oil due to tightening global consumer spending and an overall slowdown in the global economy could result in crude prices falling to $40 by 2010, according to the latest forecast by Standard Chartered Bank.

With oil demand supply dynamics starting to shift, the burden on geopolitical concerns to keep oil prices high is rising. This means that the risks to oil prices, absent a supply shock, are increasingly to the downside, which in turn means growth in the Gulf oil exporters is likely to slow significantly in 2007, said Steve Brice, Regional Head of Research, MEPA and South Asia, Standard Chartered Bank in a report.

Demand for oil has come under pressure due to a few factors. First, tightening consumer budgets have encouraged people to seek out ways to conserve and pursue alternative sources of energy.

On the global supply side, the report said the fundamentals are improving. So far, the hurricane season has failed to interrupt supplies. Meanwhile, the period of sustained high oil prices since 2004 has led to increased investment in future production, which is now starting to bear fruit. According to the report huge investments in conservation and alternate energy sources are also expected to reduce demand.

Sugar

IN the London market, raw sugar futures prices have fallen to nine month lows, due to a global supply glut. On August 31, the price of white sugar hit $361 per ton, the weakest level this year.

Sergey Gudoshnikov, an economist at the London-based International Sugar Organisation (ISO), said he expected sugar prices to fall further but not as far as they did when the world was last in surplus in 2002-03.

China, India, Thailand, and Brazil would together increase output by 10 million ton in 2006-07 from 2005-06.

Refined sugar prices have also sunk due to the supply glut, with benchmark London October ISUV6 futures hitting seven-month lows of $371.10 per ton on August 29. October futures were down 60 cents to $376.40 in August 30. The analyst said heavy stocks had built up from the current harvest in southern Brazil, and Gudoshnikov forecast an all time high 2006-07, Indian harvest of around 22.5 million ton.

Trade houses were expecting 2006-07 surpluses in excess of three million tons, although analysts said any spike in crude oil prices might again funnel large amounts of cane in top grower Brazil into the manufacture of fuel ethanol.

The outlook for sugar supplies would depend on the amount of rain Brazil received from now until mid 2007, analysts said. Brazil has recently faced a prolonged dry spell, but normal rains from October might presage another surge in production.

Silver

Silver prices touched a three month high of $12.79 a troy ounce, up more than four per cent. Gold’s sister metal continues to benefit from the launch earlier this year of a silver fund on the American Stock Exchange.

Strong investor demand for the metal has lifted prices by more than a third since the middle of June. Overnight news of a drop in output in world number two silver producers Mexico was also supportive.

Silver has outperformed gold in the past month, gaining 14 per cent versus the drop of 1.6 per cent in bullion. Investor enthusiasm for a new silver investment tool has added to its allure. Physical holdings in Barclays Global Investors shares Silver Trust climbed above 100 million ounces on August 30, for the first time since the ETF was launched in late April.

Rain calamities in Sinjhoro

THE recent rains have played an unprecedented havoc in district Sanghar. It started raining from July 29, continuing till August 23. During this period more than 25,000 families became homeless. The district enjoys the first position as a cotton-growing area in Sindh and third in the entire country.

Throughout the rainy season, more than 60 cotton and ginning factories situated in the district remained idle. The destroyed cotton plants, sugar cane and paddy were used as fodder for animals. A large number of district’s livestock died because of various diseases. Rain water is still standing on agricultural lands. Many villages also remain surrounded by it.

Rain damages also occurred in taluka Sinjhoro where it destroyed 90 per cent of crops and at least 35 per cent houses of villagers. A number of school buildings also collapsed,

A large number of local inhabitants are in dire need of shelter and other necessities of life. Although 25 relief camps have been established, they have proved inadequate for all the victims of rains.

Ghulam Nabi Nizamani & Ali Mangrio
Sanghar