Tighter sanctions will push the Iranian government to make some tough decisions. The Islamic republic can find ways to deal with the pressures the next round of sanctions would bring, but, probably, not without political fallout.

A crude pain

Business Standard

Iran has threatened to prematurely cut its oil ties to Europe. It may be just a bluff, but there would be no winners if Tehran abruptly stops crude exports to the European Union ahead of a full embargo, due to come into full effect in July. The Islamic Republic may see some short-term gains, but leaving aside the politics of the move, the financial risks outweigh the benefits.

First to lose

Saudi Arabia can&rsquo;t easily relieve Barack Obama&rsquo;s fuel price misery. The kingdom&rsquo;s assurances that it can and is willing to increase oil supply in the event of a shortage won&rsquo;t do much to lower US fuel prices, which are reaching risky levels ahead of the presidential elections in November. In fact, the options for the world&rsquo;s biggest oil supplier to rein in runaway crude are all imperfect.

The good, bad, and the crude

Egypt&rsquo;s search for a successor to Hosni Mubarak is losing credibility. A move by the authorities to bar 10 of the 23 candidates, including three top contenders, could reshape the presidential election just five weeks before the polls start. This will add to the concerns of investors, who should worry more about a timely, free vote than about who actually ends up in charge of the country.

Credibility dent

Emirates airline is changing its flight path. After more than a decade of organic growth, the Dubai carrier announced this week that it was studying foreign acquisitions. While the airline says it hasn&rsquo;t entered any talks for the moment, the shift comes amid rising competition. Meanwhile, India is due to decide whether to allow foreign airlines to own up to 49 per cent of its local carriers.

Hello tomorrow

Formula One has failed to see the red flag in Bahrain. The prestigious sporting event won't gain much from holding a fixture on this tiny Gulf island still in turmoil from its Arab uprising, amid sharp condemnation of human rights abuses. Pushing on with the weekend event looks like a stubborn and risky miscalculation.

Red flag

Saudi Arabia&rsquo;s call for Gulf nations to combine into a single entity appears to lay the ground for some kind of union with Bahrain. King Abdullah first highlighted the security issues facing the region when its leaders met in December &mdash; nine months after the kingdom sent tanks to tame a pro-democracy movement in Bahrain. Speculation is now swirling about how the relationship between the strongest and weakest members of the six-nation bloc could evolve, ahead of a meeting of the Gulf Cooperation Council this week.

A royal squeeze

Iran&rsquo;s yuan-for-oil payments won&rsquo;t catch on, yet. Tough sanctions from the United States have pushed the Islamic Republic to accept the Chinese currency as part-payment for crude exports to the People&rsquo;s Republic. But while the yuan should play a bigger role in the world&rsquo;s energy settlements by the end of the decade, Iran&rsquo;s shift won&rsquo;t be the catalyst.

Yuan today, gone tomorrow?

Qatar can&rsquo;t seem to get enough commodities exposure. The emirate&rsquo;s sovereign wealth fund holds three per cent of French oil major Total, has built up an eight per cent stake in UK miner Xstrata ahead of its planned merger with Glencore and has even dipped a toe into gold. Now it&rsquo;s adding Shell to the portfolio. Buying into the Anglo-Dutch oil major is a logical next step, given existing strategic ties. The move may even do more to diversify the gas-rich economy&rsquo;s resource exposure than appears at first blush.

Scooping up Shell

The presidential election won&rsquo;t end investors&rsquo; worries about Egypt. Economic issues &mdash; corruption and poverty &mdash; were high on the list of protesters&rsquo; complaints during the Arab Spring and the subsequent uncertainty has worsened the economic position of the Middle East&rsquo;s most populous nation. But the leading candidates in the first round of landmark elections on Wednesday haven&rsquo;t offered many clear economic proposals.

The rule of uncertainty

Qatar is dodging its shareholder duty. The emirate successfully used its muscle to extract better terms from Glencore in the commodity traders&rsquo; union with miner Xstrata. But the decision to vote in favour of the merger while abstaining on a side vote on retention bonuses makes Qatar Holding seem inconsistent at best.

A job half well-done

Iran&rsquo;s sanction pain is just beginning. Oil revenue in the Islamic Republic may have fallen by nearly one third, or $35 billion, on the back of a slowdown in exports and declining prices. With US sanctions set to tighten and China&rsquo;s apparent readiness to go along, Teheran&rsquo;s budget could be thrown deep into the red.

Crude pain

Qatar&rsquo;s demand that Glencore sweetens its offer to merge with Xstrata doesn&rsquo;t mean the Gulf state has suddenly become a gutsy activist investor. But it does show that Qatar won&rsquo;t sit by passively when a bid for one of its holdings puts it on the spot.

No great sheikhs

It&rsquo;s time for Iraq to rewrite its oil policy. The central government in Baghdad does not want oil companies to deal directly with the semi-autonomous northern Kurdish region, and has threatened to blacklist those that do. But Russia&rsquo;s Gazprom, France&rsquo;s Total and Exxon Mobil, which all have operations in the south, have signed deals with the Kurdistan Regional Government. Oil majors think, probably rightly, that they have less to lose than Baghdad from the standoff.

No easy fix

Qatar&rsquo;s sovereign fund gazed into Ivan Glasenberg&rsquo;s eyes and made him blink. That&rsquo;s a huge victory over Glencore&rsquo;s chief executive, whose nature is never to show weakness. True, the Gulf state may not have extracted the precise terms it demanded for the commodities mega-merger. But it got a significant sweetener at the 11th hour from buyer Glencore after using its 12 per cent stake in Xstrata to threaten to kill the deal. Far from being &ldquo;dumb money&rdquo;, Qatar&rsquo;s sovereign fund should command a new respect in financial markets.

Smart money

Mohamed Mursi is going for real power at last. The newly-elected Egyptian Islamist president has fired the country&rsquo;s long-standing defence minister and the army chief of staff in a move that affirms his power over the military, which had seemed intent on keeping a tight lid on the country&rsquo;s government. Mursi also quashed a military order that had limited his powers, taking over legislative powers temporarily.

Una Galani