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Trump officials rush to Turkey as Moscow advances to fill Syria void from U.S. retreat

Trump officials rush to Turkey as Moscow advances to fill Syria void from U.S. retreat
By Tuvan Gumrukcu

ANKARA (Reuters) – The Trump administration dispatched its top officials to Turkey on Wednesday for emergency talks to try to persuade Ankara to halt an assault on northern Syria, while Russian troops swept into territory abandoned by Washington in a sudden retreat.

Robert O’Brien, White House national security adviser since last month, arrived in Turkey aiming to meet Foreign Minister Mevlut Cavusoglu on Wednesday. Vice President Mike Pence and Secretary of State Mike Pompeo are expecting to meet the following day with President Tayyip Erdogan.

The administration is trying to contain the fallout from Erdogan’s decision to send forces last week to attack Syrian Kurdish militia that were Washington’s close allies.

Erdogan again insisted there would be no ceasefire, and said he might call off a visit to the United States next month because of the “very big disrespect” shown by U.S. politicians.

He also denounced the United States for taking the “unlawful, ugly step” of imposing criminal charges against a Turkish state bank over allegations it broke sanctions on Iran.

Turkey’s assault, launched after a call between Erdogan and President Donald Trump, forced Washington to abandon a strategy in place for five years and pull its troops from northern Syria.

It has spawned a humanitarian crisis, with 160,000 civilians taking flight, a security alert over thousands of Islamic State fighters abandoned in Kurdish jails, and a political maelstrom at home for Trump, accused by congressional leaders, including fellow Republicans, of betraying loyal U.S. allies, the Kurds.

Syrian government forces, backed by Washington’s adversaries Russia and Iran, have meanwhile taken advantage of the power vacuum left by retreating U.S. troops to advance swiftly into the largest swath of territory previously outside their grasp.

Trump played down the crisis on Wednesday, saying the conflict was between Turkey and Syria and that it was “fine” for Russia to help its ally Damascus. Sanctioning Turkey would be better than fighting in the region, he said.

Washington announced sanctions to punish Turkey on Monday, but Trump’s critics said the steps, mainly a steel tariffs hike and a pause in trade talks, were too feeble to have an impact.

A day later U.S. prosecutors’ charges were unveiled against Turkey’s majority state-owned Halkbank for taking part in a scheme to evade Iran sanctions. Washington says the case is unrelated to politics. Halkbank denies wrongdoing and called the case part of the sanctions against Turkey.

U.S. “SHOW OF FORCE”

The Turkish advance, and Washington’s need to swiftly evacuate its own forces, have brought the two biggest militaries in NATO close to confrontation on the battlefield. Washington has complained about Turkish artillery fire near its troops.

In the latest potential flashpoint, U.S. military aircraft made a “show of force” over the border city of Kobani after Turkish-backed fighters came close to American troops there, a U.S. official said.

Pence said Erdogan had promised Trump by phone that Turkey would not attack Kobani, a strategically important border city where U.S. forces first came to the aid of Kurds against Islamic State, which massacred Kurdish civilians there in 2014.

Erdogan said he had not broken his promise to Trump: “Mr Trump’s remark on Kobani was ‘Don’t strike there’,” Erdogan told reporters late on Tuesday. “We said that we had only done an encircling operation there at the moment.”

LAND RUSH

Washington’s hasty exit has created a land rush between Turkey and Russia – now the undisputed foreign powers in the area – to partition the formerly U.S.-protected Kurdish area.

The Syrian Observatory for Human Rights, which monitors the eight-year Syrian war, said on Wednesday Russian troops had crossed the Euphrates River to advance to Kobani’s outskirts.

Lebanon’s al-Mayadeen TV reported that Russian-backed Syrian forces had also set up outposts in Raqqa, the one-time capital of Islamic State’s caliphate, which the Kurds captured in 2017 at the peak of their campaign with U.S. support.

Hours after Washington announced its pullout on Sunday, the Kurds made a rapid deal with Washington’s adversaries, the Russia- and Iran-backed government of President Bashar al-Assad.

Russia-backed Syrian troops have swiftly moved across the breadth of the Kurdish-held area including Manbij city, a target of Turkey which U.S. forces said on Tuesday they had quit.

Reuters journalists traveling with Syrian government forces on Tuesday entered Manbij and saw Russian and Syrian flags on buildings nearby. Russian state media said on Wednesday Syrian government forces had occupied bases abandoned by U.S. troops.

Erdogan, due in Moscow later this month, said he had told President Vladimir Putin that Russia could move forces into Manbij, provided that the Kurdish YPG militia was cleared out.

Erdogan says Trump approved his plan for a “safe zone” about 30 km (20 miles) inside Syria. Trump says he did not endorse the plan but Washington could not stay to police the Middle East.

“They say ‘declare a ceasefire’. We will never declare a ceasefire,” Erdogan told reporters. “Our goal is clear. We are not worried about any sanctions.”

The Turkish campaign shows no sign of abating on the ground, with most fighting so far around two border cities, Ras al Ain and Tel Abyad. A Reuters cameraman in the Turkish border town of Ceylanpinar reported the sound of heavy gunfire just across the frontier in Ras al Ain, which Turkey’s Defence Ministry had earlier said its forces controlled.

(Additional reporting by Mert Ozkan; Writing by Dominic Evans and Peter Graff; Editing by Alison Williams)

Turkish assault in Syria weakens Iraq Kurds, strengthens regional powers

Iraqi Kurds protest the Turkish offensive against Syria during a demonstration outside the United Nations building in Erbil, Iraq October 12, 2019.REUTERS/Azad Lashkari

Turkish assault in Syria weakens Iraq Kurds, strengthens regional powers
By Raya Jalabi and Ali Sultan

ERBIL, Iraq (Reuters) – A Turkish border offensive against Syrian Kurdish forces will further weaken Iraq’s divided Kurds next door and embolden regional rivals who have one thing in common – they want no Kurdish state.

The assault, following an American troop pullback that in effect gave Turkey a U.S. green light, alarmed inhabitants of Iraq’s semi-autonomous Kurdish region. It ended Syrian Kurdish rule of “Rojava” – their name for northeastern Syria – and left Iraqi Kurdistan as the Kurds’ only self-governed land.

Outraged that their Syrian kin were betrayed by another U.S. policy decision, protesters in Iraqi Kurdish cities burned Turkish flags and authorities promised to help refugees fleeing.

“The world has failed the Kurds,” said Bayan Ahmed, a 20-year-old student.

“That’s our story – we’re always betrayed.”

But a more cautious reaction from Iraqi Kurdish leaders who did not condemn neighboring Turkey by name showed Kurdistan’s economic and political reliance on the same country that is battling their Syrian brethren over the border.

It also masked the underlying tensions between the two main parties in Iraq’s Kurdistan — the Patriotic Union of Kurdistan PUK, a close ally of Iran, and the ruling Kurdistan Democratic Party (KDP), which enjoys close relations with Ankara.

As Turkey advances on Kurdish militants, Syria’s government retakes Kurdish areas and Iran-aligned militias secure regional supply lines, Iraqi Kurdish dependence on regional powers will only grow, according to Kurdish officials and analysts.

“Kurds are caught between powerful states all working against them, Turkey, Syria, Iran, even Iraq. The Kurdish government’s worried. It’s the only one left,” said Shirwan Mirza, a Kurdish lawmaker in the Iraqi parliament.

“To preserve itself, it might look to closer cooperation with Baghdad – but not as first-class citizens.”

Iraqi Kurds are still reeling from a failed independence bid in 2017. They say the attempt was wrecked by U.S. criticism of their referendum on full Kurdish self-rule, a stance they see as a betrayal by Washington.

The U.S. criticism, plus Turkish and Iranian condemnation, paved the way for Iraqi government forces to retake areas under Kurdish control since Islamic State seized vast parts of Iraq.

Bilal Wahab, a fellow at the Washington Institute for Near East Policy, said the two Kurdish experiments in self-government in Syria and Iraq “suffered a nosebleed” in the past two years.

Wahab questioned whether the setbacks were due to bad timing, lack of political nous, or “a bigger picture where Kurds will always end up with the shorter end of the stick regardless.”

FAILED INDEPENDENCE, DIVISIONS

Kurds have sought an independent state for almost a century, when the Ottoman Empire crumbled and left Kurdish-populated territory scattered between Turkey, Iran, Iraq and Syria.

But moves by regional powers to keep the ethnic group of 30 million in check, combined with internal divisions, have long thwarted efforts towards independence.

In northern Iraq, the Kurds got their first self-run territory in 1991, after the Gulf War.

But since then, they have had to balance their ambitions for full independence with the threat of a backlash from their neighbors and the reluctance of Baghdad to redraw borders.

Syria’s Kurdish experiment is younger. The war that began in 2011 allowed Kurds in the northeast to rule themselves as President Bashar al-Assad was busy fighting rebels in the west.

U.S. forces partnered with the Syrian Kurdish YPG militia to defeat Islamic State, providing a powerful Western ally Kurds hoped would support shaky de-facto self-administration.

That ended last week as U.S. troops withdrew and Turkey began its incursion. Ankara sees the YPG as terrorists and an extension of its home-grown PKK militant group.

Desperate to stave off the offensive, the YPG made a deal with Assad to allow his forces to defend them, giving back territorial control to Damascus for the first time in years.

Assad’s ally Iran is also set to gain. Iraqi paramilitary groups backed by Iran on the Iraq-Syria border will likely help Assad secure control, strengthening their own supply lines along a corridor of territory from Tehran to Beirut.

In this environment the Kurdish regional Government (KRG) is not in a position to rush to the aid of Syrian Kurds, and nor will it want to, for fear of upsetting regional ties with Iran and Turkey, according to Kurdish politicians and analysts.

In Iraq, this could push Kurdish authorities to work closer with the central government, they say. The 2017 independence move left the Kurds weaker in their relations with Baghdad.

Maintaining ties with Turkey will also be crucial.

“The KDP has become a part of (Turkish President Tayyip) Erdogan’s plan … they have interests in keeping up ties, among them oil and gas contracts,” said Bezdar Babkar of the Kurdish opposition Change Movement.

The Kurdish Regional Government (KRG) relies on Turkish pipelines to export oil. Links between the ruling KDP and Turkey go beyond the economy, including a shared enemy in the PKK. Turkey regularly bombs PKK bases in northern Iraqi Kurdistan.

KRG help to Syrians will therefore be limited to taking in some refugees, which it has started doing. KDP rival the PUK, which controls areas near the Iran border, has closer ties with the PKK and has issued stronger condemnation of Turkey.

The two Kurdish parties fought a civil war in the 1990s. More recently they have taken to sharing power, but competing regional loyalties, rivalry and strains govern the relationship.

(Reporting by Raya Jalabi and Ali Sultan in Sulaimaniya; Writing by John Davison; Editing by Samia Nakhoul, William Maclean)

Saudi visit shows Putin’s deepening Middle East influence

By Olesya Astakhova and Stephen Kalin

RIYADH (Reuters) – President Vladimir Putin signaled Moscow’s growing Middle East clout on Monday by visiting Saudi Arabia for the first time in over a decade, buoyed by Russian military gains in Syria, strong ties with Riyadh’s regional rivals and energy cooperation.

Moscow accrued power in the Middle East in 2015 by sending troops to Syria, where it and Iran have been key backers of President Bashar al-Assad amid civil war, while the United States pulled back. Saudi Arabia sided with Syrian rebels.

On the eve of Putin’s trip, U.S. troops were abruptly retreating from northern Syria as Russian-backed government forces deployed deep inside Kurdish-held territory under a deal to help fend off a Turkish cross-border offensive.

Russia has also strengthened ties with both Sunni Muslim Saudi Arabia and Shi’ite Iran, which are locked in a decades-old contest for influence that veered towards open conflict after a recent spate of attacks on oil assets in the Gulf that Riyadh and Washington blame on Tehran. Iran denies the charges.

Tensions with Iran, which is locked in several proxy wars with Saudi Arabia, have risen to new highs after Washington last year quit a 2015 international nuclear accord with Tehran and re-imposed sanctions.

The Russian president, accompanied by his energy minister and head of Russia’s wealth fund, met King Salman at his palace along with de facto ruler Crown Prince Mohammed bin Salman, with whom Putin says he has friendly relations.

Deepening ties have seen non-OPEC Russia, once regarded as a rival in oil markets, join OPEC kingpin Saudi Arabia in forming an alliance known as OPEC+ to support crude prices by restraining output.

At a morning forum convening 300 Saudi and Russian CEOs, Saudi Energy Minister Prince Abdulaziz bin Salman said OPEC+ countries were showing high commitments to the deal, and his Russian counterpart said there were no talks underway to change it.

Ahead of the visit, Putin, who offered to provide Russian defense systems to the kingdom after Sept. 14 attacks on its oil facilities, said he could also play a positive role in easing tensions with Tehran given good ties with both sides.

Any progress on long-mulled Saudi plans to purchase the Russian S-400 surface-to-air missile systems would cause disquiet in Washington, which is sending 3,000 troops and additional air defense systems to Saudi Arabia.

U.S. President Donald Trump has resisted pressure to sanction Riyadh over human rights abuses, including the murder of journalist Jamal Khashoggi, calling that a “foolish” move that would only benefit competitors Russia and China.

OIL AND INVESTMENTS

Asked about concerns Riyadh was cozying up to Moscow, Saudi Minister of State for Foreign Affairs Adel al-Jubeir said he saw no contradiction.

“We don’t believe that having close ties with Russia has any negative impact on our relationship with the United States,” he told reporters on Sunday. “We believe that we can have strategic and strong ties with the United States while we develop our ties with Russia.”

Russian and Saudi flags lined Riyadh streets ahead of Putin’s one-day visit, which includes an evening performance by Russia’s Tchaikovsky Symphony Orchestra. Putin then travels to the United Arab Emirates.

In meetings with Saudi leaders, the Russian president will discuss the OPEC+ pact, which has seen production cut by 1.2 million barrels per day since January.

The two sides are expected to sign more than $2 billion of deals, including a joint investment by state oil giant Saudi Aramco and Russia’s RDIF sovereign wealth fund.

RDIF head Kirill Dmitriev said a number of Russian investors were interested in a planned initial public offering of Aramco. The oil major could sell 1-2% through a local listing its chairman said would be announced “very, very soon”, ahead of a potential international offering.

Energy Minister Alexander Novak said Russia’s Gazprom is interested in cooperating with Saudi firms on natural gas.

Moscow, the world’s largest wheat exporter, made some progress in accessing the Saudi and Middle Eastern markets when the kingdom agreed in August to relax specifications for wheat imports, opening the door to Black Sea imports.

RDIF and Saudi Arabia’s SALIC plan to sign an agreement to jointly search for investment projects in Russia’s agricultural sector, a source told Reuters.

(Additional reporting by Maher Chmaytelli and Dahlia Nehme in Dubai and Polina Devitt in Moscow; Writing by Stephen Kalin; Editing by Lincoln Feast, William Maclean)

U.S. to deploy large number of forces to Saudi Arabia

By Phil Stewart and Idrees Ali

WASHINGTON (Reuters) – The United States announced on Friday a new, large deployment of forces to Saudi Arabia to help bolster the kingdom’s defenses following the Sept. 14 attack on its oil facilities, which Washington and Riyadh have blamed on Iran.

The planned deployment, which was first reported by Reuters, will include fighter squadrons, one air expeditionary wing and air defense personnel, the Pentagon said.

The Pentagon said it was sending two additional Patriot batteries and one Terminal High Altitude Area Defense system (THAAD).

“Taken together with other deployments, this constitutes an additional 3,000 forces that have been extended or authorized within the last month,” Pentagon spokesman Jonathan Hoffman said in a statement.

It was unclear whether some of the newly announced troops might replace other American forces expected to depart the region in the coming weeks or months.

The Pentagon has yet to announce, for example, whether it will replace the aircraft carrier USS Abraham Lincoln and its strike group when it eventually wraps up its deployment to the Middle East.

The deployment is part of a series of what the United States has described as defensive moves following the attack on Saudi Arabia’s oil facilities last month, which rattled global energy markets and exposed major gaps in Saudi Arabia’s air defenses.

Iran has responded to previous U.S. troop deployments this year with apprehension. It denies responsibility for the attack on Saudi Arabia as well as attacks on oil tankers earlier this year.

(Reporting by Phil Stewart and Idrees Ali; Editing by Chris Reese and Tom Brown)

Factbox: The Kurdish struggle for rights and land

(Reuters) – Turkish forces are poised to advance into northeast Syria after U.S. troops began vacating the area, in an abrupt policy shift by President Donald Trump widely criticized in Washington as a betrayal of America’s Kurdish militia allies.

Ankara says it plans to create a “safe zone” to resettle millions of refugees currently living on Turkish soil. This would then serve as a buffer against what Turkey sees as its main security threat in Syria – Kurdish YPG fighters who Ankara says are linked to militants waging an insurgency inside Turkey.

Turkey, Syria, Iraq and Iran all have large Kurdish minorities seeking varying degrees of autonomy from central governments after decades of repression.

This is an overview of their status.

HISTORY

The Kurdish ethnic minority, mainly Sunni Muslims, speaks a language related to Farsi and lives mostly in a mountainous region straddling the borders of Armenia, Iraq, Iran, Syria and Turkey.

Kurdish nationalism stirred in the 1890s when the Ottoman Empire was on its last legs. The 1920 Treaty of Sevres, which imposed a settlement and colonial carve-up of Turkey after World War One, promised them independence.

Three years later, Turkish leader Kemal Ataturk tore up that accord. The Treaty of Lausanne, ratified in 1924, divided the Kurds among the new nations of the Middle East.

SYRIA

Before Syria’s popular uprising erupted in 2011, Kurds formed 8-10 percent of the population.

The Baathist state, championing Arab nationalism, had deprived thousands of Kurds of citizenship rights, banned their language and clamped down on Kurdish political activity.

During the war, President Bashar al-Assad focused on crushing mainly Sunni Arab rebels with the help of Russia and Iran, turning a blind eye as Kurdish fighters carved out self-rule across the north and east.

Kurdish forces have emerged among the biggest winners, controlling about a quarter of the country — territory rich in oil, water and farmland. It is the biggest chunk of Syria not in state hands, now with its own forces and bureaucracy.

Assad has said he will recover the northeast, but the two sides have kept some channels open.

The Kurdish YPG militia’s power grew after joining forces with U.S. troops to seize territory from Islamic State. While the U.S. deployment has provided a security umbrella that helped Kurdish influence expand, Washington opposes the autonomy plans.

Syrian Kurdish leaders say they do not seek partition but rather regional autonomy as part of Syria. Faced with the threat of a Turkish attack, the Kurdish-led authority in northern Syria has declared a state of “general mobilization” across north and east Syria.

TURKEY

Kurds form about 20 percent of the population.

The Kurdistan Workers Party (PKK) took up arms against the state in 1984, waging an insurgency for autonomy in Turkey’s largely Kurdish southeast. Since then, more than 40,000 people have been killed in the conflict.

PKK leader Abdullah Ocalan was captured in 1999, tried and sentenced to death. That was later reduced to life in prison after Turkey abolished the death penalty.

Turkish President Tayyip Erdogan has removed restrictions on using the Kurdish language. The government held talks with Ocalan, who is in jail on an island near Istanbul, in 2012, but they broke down and the conflict has revived.

The United States, the European Union and Turkey classify the PKK as a terrorist organization.

Turkey’s military has often struck targets in Iraq’s Kurdish region near the PKK’s stronghold in the Qandil mountains.

Erdogan has said he will crush Syria’s YPG, which Ankara sees as a branch of the PKK, and has sent troops into northern Syria to mount offensives rolling back the Kurdish fighters.

IRAQ

Kurds form 15-20 percent of the population, mainly inhabiting the three northern provinces of Iraqi Kurdistan.

Late President Saddam Hussein’s rule targeted Iraqi Kurds in the late 1980s when chemical gas was used, villages were razed and thousands of Kurds were forced into camps.

Their region has been semi-autonomous since 1991, has its own regional government and armed forces, but still relies on the Baghdad central government for its budget.

When Islamic State militants swept through much of northern Iraq in 2014, Kurdish fighters exploited the collapse of central authority to take control of Kirkuk, the oil city they regard as their ancient regional capital, as well as other territory disputed by Baghdad and the Kurdish north.

Iraqi government forces and Kurdish Peshmerga fighters, with U.S. backing, defeated Islamic State which had captured swathes of northern Iraq.

Iraq’s Kurds held a referendum on independence in September 2017, which backfired and triggered a regional crisis in the face of opposition from Baghdad and regional powers.

The vote prompted military and economic retaliation from Baghdad, which retook the territory seized by Kurdish forces since 2014. Ties have since improved, but tensions remain over oil exports and revenue-sharing.

IRAN

Kurds form about 10 percent of the population.

In 2011, Iran pledged to step up military action against the Party of Free Life of Kurdistan, a PKK offshoot that has sought greater autonomy for Kurds in Iran.

Rights groups say Kurds, along with other religious and ethnic minorities, face discrimination under the ruling clerical establishment.

The elite Revolutionary Guards have put down unrest in the Kurdish community for decades, and the country’s judiciary has sentenced many activists to long jail terms or death. Iran’s military has demanded Iraqi authorities hand over separatist Kurdish dissidents stationed there and close their bases.

(Compiled by reporters in Beirut, Baghdad, Tehran and Istanbul; Editing by Gareth Jones)

Iranian president says U.S. offered to remove all sanctions on Iran in exchange for talks

FILE PHOTO: Iranian President Hassan Rouhani gestures at the conclusion of his address to the 69th United Nations General Assembly at the United Nations Headquarters in New York, September 25, 2014. REUTERS/Mike Segar/File Photo

By Babak Dehghanpisheh

GENEVA (Reuters) – The United States offered to remove all sanctions on Iran in exchange for talks but Tehran has not yet accepted the offer due to the current “toxic atmosphere”, Iranian President Hassan Rouhani said on Friday.

Rouhani, speaking on his return from the United Nations General Assembly in New York, said he met there with U.S. officials at the insistence of Germany, Britain and France.

“It was up for debate what sanctions will be lifted and they (the United States) had said clearly that we will lift all sanctions,” Rouhani said, according to his official website.

Iran was ready for negotiations but not in an atmosphere of sanctions and pressure, the Iranian president said.

“This action wasn’t in a manner that was acceptable, meaning that in the atmosphere of sanctions and the existence of sanctions and the toxic atmosphere of maximum pressure, even if we want to negotiate with the Americans in the 5+1 framework, no one can predict what the end and result of this negotiation will be,” he said.

Crude slipped on the report, adding to earlier losses caused by a faster-than-expected recovery in Saudi output, slowing Chinese economic growth, a Wall Street Journal report saying that Saudi Arabia had agreed a partial ceasefire in Yemen. Brent crude was trading below $62 a barrel. [O/R]

Rouhani did not meet U.S. President Donald Trump in New York and European and Gulf officials expect Washington to keep tightening the vice on Iran’s economy.

The United States and Iran are at odds over a host of issues, including the U.S. withdrawal from the 2015 Iran nuclear deal, U.S. accusations – denied by Tehran – that Iran attacked two Saudi oil facilities on Sept. 14, and Iran’s detention of U.S. citizens on what the United States regards as spurious grounds.

(Reporting by Babak Dehghanpisheh; Editing by Angus MacSwan)

Israeli minister urges unity government to stave off ‘blow-up’ in Iran tensions

FILE PHOTO: Israeli Energy Minister Yuval Steinitz speaks during an interview with Reuters in Cairo, Egypt January 14, 2019. REUTERS/Mohamed Abd El Ghany/File Photo

JERUSALEM (Reuters) – Israel’s energy minister on Friday warned tensions between Iran and the United States were reaching a breaking point and an Israeli unity government deal was needed to stave off the threat of conflict following an inconclusive election last week.

Washington has blamed Iran for a Sept. 14 attack on Saudi Arabia’s oil facilities, and on Thursday announced it would send radar systems and Patriot missiles to the kingdom to bolster its defenses. Iran denies carrying out the attack.

Yuval Steinitz, who is also a member of Prime Minister Benjamin Netanyahu’s security cabinet, warned “we are on the verge of the Iran situation blowing up”.

“(The) chances of an American-Iranian or Saudi-Iranian blow-up, or a blow-up in the Gulf which, if it happens, is liable to reach us too, is something that is very, very tangible and realistic,” Steinitz told Tel Aviv radio station 102 FM on Friday.

Steinitz, a member of Netanyahu’s right-wing Likud party, said the potential for a wider conflict “is another reason for the need to hasten and form a broad unity government now, and not to be dragged into months of boycotts and discussions.”

On Wednesday, Netanyahu was tapped to try to form the next coalition government after garnering marginally more support from lawmakers than his centrist rival, Benny Gantz, in a Sept. 17 election.

Neither leader was able on his own to put together a coalition with a ruling majority or reach a power-sharing deal for a unity government between their two parties.

However, with little appetite among Israeli voters for a third trip to the polls in less than a year if no government emerges, public pressure could grow for Netanyahu and Gantz to compromise and join forces.

(Reporting by Rami Ayyub and Dan Williams, Editing by William Maclean)

Khamenei says Iran should give up hope of European help against U.S. sanctions

DUBAI (Reuters) – Iranian Supreme leader Ayatollah Ali Khamenei said on Thursday European countries were unlikely to help Iran against U.S. sanctions, and Tehran “should give up all hope” in that regard, according to his official website.

Britain, France and Germany, parties to a 2015 nuclear deal with Iran, have tried to set up a trade mechanism to barter humanitarian and food goods with Iran after the United States withdrew from the deal last year and re-imposed sanctions. But the mechanism is still not operational.

Iran has repeatedly said it will ramp up its nuclear activities unless the European countries do more to protect its economy from the impact of the U.S. sanctions.

“Despite their promises, the Europeans have practically adhered to America’s sanctions and have not taken any action and are unlikely to do anything for the Islamic Republic in the future. So one should give up all hope on Europeans,” Khamenei was quoted as saying.

“There should be no trust in countries that have held the banner of hostility to (Iran’s) Islamic system, led by the United States and some European countries, because they are openly hostile to the Iranian people,” Khamenei said.

“The road to interaction and negotiations is open to all countries other than America and the Zionist regime (Israel),” Khamenei told members of a powerful clerical body.

(Reporting by Dubai newsroom; Editing by John Stonestreet and Peter Graff)

Drones, sanctions, contamination: supply surprises leave oil unfazed

By Ahmad Ghaddar and Noah Browning

LONDON (Reuters) – They should have started a bull run, but supply shocks that have rocked the oil industry this year have failed to deliver a sustained rise in crude prices.

Drone attacks crippled Saudi Aramco’s oil plants, U.S. oil sanctions knocked out exports from Iran and Venezuela, and massive contamination tainted Russian oil flows.

Yet, instead of sky-high prices, the market has been kept in check by a flood of oil from the U.S. fracking boom and worries about a global recession weighing on the demand outlook.

And there is unlikely to be a spike anytime soon, analysts and data indicate because high-tech industry understands better than ever just how replete their market is with oil.

“Between fears of peak oil demand, unlimited shale growth, a looming global recession and the possibility that millions of barrels of OPEC barrels (sanctioned or otherwise) could return to the market fairly quickly, there is no faith in the future,” said Amrita Sen, chief oil analyst at Energy Aspect.

The Organization of the Petroleum Exporting Countries, which includes Iran, Venezuela and its de facto leader Saudi Arabia, has continued to rein in supply this year but the group’s efforts have not delivered the hoped-for price surge.

Oil futures markets indicate that supply outages have not dealt a boost to prices as investors see the unexpected shocks to oil output will not massively dent overall supply.

SAUDI BOUNCE-BACK

The Sept. 14 attacks on Aramco sites knocked out around 5.7 million bpd of capacity from the world’s biggest oil exporter, nearly 6% of global oil supplies.

Despite the unprecedented damage, Saudi Arabia has swiftly restored its production capacity to 11.3 million barrels per day, just shy of its regular output, sources briefed on Aramco’s operations told Reuters.

Brent oil prices surged 15% in the wake of the attacks but have since lost most of their gains and are trading at around $62 a barrel.

 

While U.S. oil output continues to surge along with the productivity of existing wells, the increasingly sparse number of operating wells could eventually drag on output and provide a boost to prices.

“We think the outlook for U.S. supply growth is far too optimistic,” Mark Hume, portfolio manager at investment giant BlackRock’s Energy and Resources Income Trust.

“There’s a real chance of U.S. growth going to the downside and I think balances will be tighter than one might anticipate right now,” he added.

DATA TRANSPARENCY

Another aspect that has softened the impact of supply shocks on oil prices is the wide availability of data which gives investors a much clearer view on the operations of the market.

BP chief executive Bob Dudley said this week that the reaction to the Saudi attacks was “sensible”.

“It says something about the market – there’s instantaneous data on storage levels which didn’t exist in the past,” he said.

Technology firms increasingly offer real-time data pinpointing storage levels in oil tanks, detecting if a refinery unit is operating using heat cameras and tracking ships.

“The data availability is a bit of a game-changer,” said Norbert Ruecker, head of economics at Swiss bank Julius Baer. “This speeds up what financial markets are all about.”

(Reporting by Ahmad Ghaddar and Noah Browning; Additional reporting by Dmitry Zhdannikov and Ron Bousso in London and Jessica Resnick-Ault in New York; Editing by Edmund Blair)

Iran to U.S.: ‘You should … pay more’ for a new deal

By Parisa Hafezi and Michelle Nichols

UNITED NATIONS (Reuters) – Iranian President Hassan Rouhani said on Wednesday that the United States must “pay more” for any agreement that goes beyond the 2015 Iran nuclear deal that Washington abandoned.

Rouhani also appeared to reject meeting U.S. President Donald Trump while the two are in New York this week for the annual United Nations General Assembly and warned world leaders that the Gulf region was on the verge of going up in flames.

“Our response to talks under pressure is no,” Rouhani said in a speech to the U.N. even as the United States increased the pressure by sanctioning Chinese firms for dealing in Iranian oil despite U.S. sanctions.

The U.S.-Iranian confrontation has ratcheted up since last year, when Trump withdrew from Iran’s nuclear deal with major powers and reimposed sanctions that have crippled its economy.

Trump wants an agreement that goes beyond the 2015 nuclear deal and would further curb Iran’s atomic program, restrict its ballistic missile work and end its support for proxy forces in the Middle East.

“If you wish more, if you require more, you should give and pay more,” Rouhani said in his U.N. General Assembly address, without giving details.

In his own speech on Tuesday, Trump accused Iranian leaders of “bloodlust” and called on other nations to put pressure on Iran after Sept. 14 attacks on Saudi oil facilities that Washington blames on Tehran despite its denials.

The United States plans to increase its military presence in Saudi Arabia following the attacks.

Rouhani, however, said the Gulf region is “on the edge of collapse, as a single blunder can fuel a big fire.”

“We shall not tolerate the provocative intervention of foreigners. We shall respond decisively and strongly to any sort of transgression to and violation of our security and territorial integrity,” Rouhani said in his speech.

Trump had said there was still a path to peace and Rouhani, the nuclear pact’s architect has also left the door open to diplomacy, saying that if sanctions were lifted, Washington could join nuclear talks between Tehran and other powers.

NO TRUMP-ROUHANI MEETING SEEN

Despite the French and British leaders urging Rouhani to meet Trump, an Iranian official told Reuters there was no chance that the U.S. and Iranian presidents would meet this week.

“The chances of a meeting are zero. They know what to do. They should return to the JCPOA, lift sanctions and end this unfair maximum pressure on Iran,” the official said, referring to the Joint Comprehensive Plan of Action (JCPOA) 2015 deal.

“Then, of course, they can join the talks under the deal,” the official, who spoke to Reuters on condition of anonymity, added.

Under the 2015 deal, Iran limited its nuclear program in return for relief from economic sanctions that constricted its ability to trade with the world.

Since abandoning the deal last year, Trump in May tightened sanctions on Iran in an effort to reduce its oil exports – its main source of foreign exchange and government revenues – to zero.

On Wednesday, the United States sanctioned five Chinese people and six entities it accused of knowingly transferring oil from Iran in violation of Washington’s curbs on Tehran. The entities include two Cosco Shipping subsidiaries but not the parent company itself.

While it originally respected the deal despite Trump’s withdrawal, Iran has gradually reduced its compliance and has threatened to block the Strait of Hormuz in the Gulf, through which an estimated one-fifth of the world’s oil passes.

The United States has blamed Iran for a series of actions since May – some of which Iran has denied – that have roiled oil markets, including attacks on half a dozen tankers, shooting down a U.S. drone and the Sept. 14 attacks on Aramco facilities.

The airstrikes on the heartland of Saudi Arabia’s oil industry damaged the world’s biggest petroleum-processing facility and knocked out more than 5% of global oil supply.

Saudi Arabia’s Minister of State for Foreign Affairs Adel al-Jubeir said Riyadh was consulting “with friends and allies about the next steps to take” once an investigation into who was responsible for the attack was complete.

The United States, European powers and Saudi Arabia have blamed the attack on Iran, instead of the Yemeni Iran-aligned Houthi group that claimed responsibility. Iran distanced itself from the attacks but said it was ready for “full-fledged” war.

The confrontation could tip the balance of power in Iran in favor of hard-liners looking to constrain Rouhani’s ability to open up to the West, particularly because Supreme Leader Ayatollah Ali Khamenei’s aversion to Washington remains a formidable barrier to any diplomatic solution.

In the penultimate sentence of his speech, Rouhani raised the possibility of talks.

“This is the message of the Iranian nation: Let’s invest on hope toward a better future rather than in war and violence. Let’s return to justice; to peace; to law, commitment and promise and finally to the negotiating table,” he said.

(Reporting by Parisa Hafezi and Michelle Nichols; Additional reporting by John Irish, Arshad Mohammed and Humeyra Pamuk; Writing by Arshad Mohammed; editing by Grant McCool)