Oil Updates — prices set for weekly gain on China stimulus optimism 

KARACHI: The State Bank of Pakistan is finalizing a green taxonomy framework set for launch in June, the finance minister said this week, paving the way for innovative instruments such as green bonds, green sukuks, and the country’s inaugural panda bond.

In May 2021, Pakistan issued its first $500 million green bond to fund a hydroelectric project. Last month, the country launched its first-ever rupee-denominated green bond as part of efforts to mobilize private sector capital for environmentally sustainable development.

Pakistan’s Nationally Determined Contributions 2021 (NDCs) set a cumulative and ambitious conditional target of an overall 50 percent reduction in its projected emissions by 2030, with 15 percent from the country’s own resources, and 35 percent subject to provision of international finance amounting to $101 billion just for energy transition. To reach the target, Pakistan aims to shift to 60 percent renewable energy (RE), and 30 percent EVs by 2030 and completely ban imported coal, while expanding nature-based solutions. A green finance scheme in the country can significantly support the achievement of these targets.

“Now the State Bank is in the process of finalizing the green taxonomy guidelines,” Finance Minister Muhammad Aurangzeb said during a talk at The Atlantic Council. “In the June timeframe, they will come out with the green taxonomy framework.”

Recalling Pakistan’s first green bond by the Water and Power Development Authority in 2021, he said a second step under the green taxonomy framework would be launch green sukuk, a Shariah-compliant Islamic bond where the proceeds are used to finance or refinance green projects that contribute to environmental sustainability, such as renewable energy, infrastructure development, and biodiversity preservation.

“The second is some of the green sukuks that we have issued locally now through the ministry of finance and the State Bank,” he said. “

“And the last thing I just want to mention here is we are quite hopeful that during this calendar year, we can print the first, inaugural panda bond that is going to also be green in nature, because the proceeds of those bonds are going to be linked with the SDG [UN’s Sustainable Development Goals] projects. So a lot is happening in that space.”

A panda bond is a Chinese Yuan (RMB)-denominated bond issued by a non-Chinese entity within China’s domestic bond market. This type of bond allows foreign entities, including governments and corporations, to access Chinese capital markets and tap into the liquidity of the Chinese financial system. Essentially, it is a way for non-Chinese issuers to raise funds in China without having to go through the standard international bond issuance process. 

Pakistan is highly vulnerable to climate change, experiencing significant impacts like rising temperatures, changing precipitation patterns, and increased extreme weather events. These changes threaten water, food, and energy security, impacting agriculture, coastal areas, and ecosystems, according to a report from the Ministry of Climate Change and Environmental Coordination. The country is also grappling with sea-level rise, glacial melting, and increased droughts.

SINGAPORE: Oil prices climbed more than 1 percent on Wednesday, extending the prior day’s gains, as investors weighed a fresh round of US sanctions on Iran, a drop in US crude stocks and a softer tone from President Donald Trump toward the Federal Reserve.

Brent crude futures climbed $1, or 1.5 percent, to $68.44 a barrel at 9:40 a.m. Saudi time, while US West Texas Intermediate crude was up 99 cents, or 1.6 percent, at $64.66 a barrel.

The US issued new sanctions targeting Iranian liquefied petroleum gas and crude oil shipping magnate Seyed Asadoollah Emamjomeh and his corporate network on Tuesday.

Emamjomeh’s network is responsible for shipping hundreds of millions of dollars’ worth of Iranian LPG and crude oil to foreign markets, the US Treasury said in a statement.

“The US issued fresh sanctions targeting Iranian energy supplies, which worried markets,” said senior market analyst Priyanka Sachdeva at Phillip Nova.

Both benchmark prices this morning were also backed by hopes of a positive outcome between the US and China over import tariffs, Sachdeva said.

Trump on Tuesday backed away from the threat of firing Fed Chair Jerome Powell after days of criticism for the Fed not cutting interest rates. Trump also signalled the possibility of lower tariffs on Chinese imports.

Meanwhile, US crude oil inventories fell by around 4.6 million barrels last week, market sources said on Tuesday citing American Petroleum Institute data.

US government data on oil stockpiles is due at 5:30 p.m. Saudi time on Wednesday. Analysts on average estimated an 800,000 barrel decline in US crude oil stocks last week, a Reuters poll showed.

Trump told reporters on Tuesday he would be “nice” in negotiations with China and that tariffs would fall significantly following a deal, but not to zero.

US Treasury Secretary Scott Bessent said he believed there would be a de-escalation in US-China trade tension but that negotiations had not yet started and would be a “slog,” a person who heard his closed-door presentation to investors at a JP Morgan conference told Reuters.

Trade tariffs have weighed on crude futures on investor concern about their potential to slow global economic growth.