Business

LONDON/NEW YORK — Candy bars have shrunk and economic growth in Asia has slowed, meaning people are eating less chocolate and its key ingredient cocoa, which has seen its price fall this year after defying commodities trends to soar in 2015.

High prices for ingredients last year, including nuts and milk as well as cocoa, helped make chocolate a less affordable treat for consumers in emerging markets such as China and India. Chocoholics in North America and Europe, meanwhile, opted for quality at the expense of quantity.

Market research firm Nielsen has estimated there was a 3.7 per cent year-on-year decline in global chocolate confectionery demand in the September-November period.

With food retailers pressing manufacturers to minimise price rises, one response was "shrinkflation". Some companies put smaller bars in the pack but kept the price unchanged.

"It used to be you had 'fun sizes' and now it's bite sizes," said Judith Ganes-Chase, soft commodities expert and president of New York-based J Ganes Consulting. "Fun size" bars in North America are two or three bites big.

A much lower-than-expected crop in Ghana, the world's second largest producer, helped push global cocoa prices up by more than 10 per cent last year. 

The early weeks of 2016 have already seen prices fall back again by as much as 15 per cent, as production in Ghana rebounded and some investment funds reduced their holdings in commodities such as cocoa.

But those hoping for chunkier bars or cheaper chocolate are likely to be disappointed, with manufacturers likely to pocket most of whatever they save on ingredients.

Euromonitor analyst Jack Skelly indicated that most chocolate makers are focused on cutting costs at the moment, noting that cocoa prices are still much higher than a few years ago.

"Profit margins are at the forefront for companies at the moment due to global market slowdown," he said.

Consumers in more affluent countries have developed a taste for premium chocolate, with the extra cost partially offset by less frequent purchases.

Premium chocolate maker Lindt & Spruengli reported sales growth of more than 7 per cent in 2015, while mass-market rivals such as US-based Hershey Company have struggled.

The maker of Hershey Kisses and Reese's Peanut Butter Cups reported a bigger-than-expected 5 per cent drop in quarterly net sales last month, noting weak demand in China and North America.

"We believe the macroeconomic environment and competitive activity in the international markets where we operate will continue to be a headwind for the chocolate category and Hershey in 2016," John P. Bilbrey, president and chief executive of Hershey Co. said during a conference call.

According to Euromonitor analyst Skelly, price rises has stunted demand growth in Asia.

"In emerging markets like China and India I think affordability is a real issue which means chocolate isn't growing as quickly as it could," he said.

Grinding recovers

The fall in prices for cocoa has already begun to revive demand for grinders, who turn cocoa beans into ingredients like the cocoa butter used to make chocolate.

"We are seeing very keen demand and off-take which is unusual for this time of the year," indicated Jeff Rasinski, vice-president of procurement and risk management for Blommer Chocolate Company, the biggest cocoa grinder in North America.

Last year's rise in cocoa prices had made it less profitable to grind cocoa. In the 2014/15 (October/September) crop year, the International Cocoa Organisation estimated global grindings fell by nearly 5 per cent to 4.1 million tonnes.

Analysts and traders said the revival in demand for processed cocoa may be driven by manufacturers restocking inventory, and doesn't necessarily mean people will soon be eating more chocolate.

"There are a lot of people who delayed purchasing when prices were high. They're going to look to take advantage of the lower prices. That's going to help improve grind," Ganes-Chase said.

"It has nothing to do with how much chocolate is being sold on the retail level. This is more about inventory management and trying to lock in lower price levels for manufacturers, bakeries or confectionery manufacturers," she added.

RABAT — Abnormally dry weather across North Africa is threatening to become another financial headache for Morocco and neighbouring Tunisia and Algeria, just as each seeks to spur more economic growth and cut public spending.

Rising food import costs would come at a delicate time, as Morocco faces protests over austerity measures, Tunisia struggles to ease an outburst of unrest over joblessness, and Algeria cuts spending after a collapse in oil prices.

Along with Egypt, Morocco, Algeria and Tunisia are among the world's biggest wheat importers, with import levels highly sensitive to the results of the local harvest.

"Drought has a huge impact across the region," Jon Marks, chairman of the consultancy Cross Border Information, said. "It weakens the trade balance and holds back efforts to overhaul the agriculture sector."

"In Algeria and Tunisia, drought may slow the pace of planned subsidy cuts," he added. "Morocco, the region's big winner from the oil price slump, may channel some more resources into rural areas."

Morocco plans nearly $600 million of measures to support farming, including assistance for small farmers, feed subsidies, and around ($125.4 million) of insurance from the state-run Moroccan Agricultural Mutual Insurance (Mamda).

It also plans to subsidise 800,000 tonnes of barley production and imports, by paying almost 1 dirham per kilogramme of the crop.

With drought looming, the Moroccan cereal harvest is expected to fall sharply from an exceptional 2015 crop that hit a record 11 million tonnes.

"[The] rainfall deficit has reached around 61 per cent until now. If the spring cultivation is also affected, this year's cereal harvest would reach hardly 2.5 millions tonnes," indicated the head of Morocco's planning agency, Ahmed Lahlimi Alami.

The planning agency estimates that the drop in agricultural output will drag down gross domestic product (GDP) growth to 1.3 per cent this year, against a government projection of 3 per cent, from an estimated 4.4 per cent in 2015.

The agency, known by its French acronym HCP, says the drought would also increase government spending this year, raising doubts over plans to cut the budget deficit.

The government estimates that the budget deficit will fall to 3.5 per cent of GDP this year from 4.3 per cent in 2015.

Agriculture accounts for more than 15 per cent of the Moroccan economy.

Longer import window

Experts and traders expect this year's Moroccan imports to remain under 3 million tonnes as last year's bumper harvest helps mitigate the impact of the drought. However, one Moroccan importer said the country would likely have to extend its import window, which is typically open from October to April.

The import window is closed to protect the local harvest, he added, but this year there may be nothing to protect. 

"We expect it to be expanded until the end of May," he continued.

Importers expect shipments to rise next season, once last year's harvest has been worked through. They say the government should suspend custom duties on soft wheat to ensure adequate supplies to the market by the start of the next season.

Across the border in Algeria, officials played down the impact of any rain shortfall on their country's economy.

"We cannot talk about drought right now," Agriculture Minister Sid Ahmedi Ferroukhi told reporters last week. "We had insufficient precipitation in November and December, but we got good volumes of rains and snows this month [January]."

Algeria's grain imports rose 11.2 per cent to 13.67 million tonnes last year, despite efforts to curb purchases from abroad. Its foreign exchange reserves dropped by $6.33 billion to $152.7 billion in the third quarter as global crude oil prices plunged.

The government has said it plans to boost cereal output to 6.13 million tonnes this year from 3.77 million tonnes in 2015, through better-quality seeds, improved mechanisation and more incentives for farmers.

It has also said it would raise total irrigated areas by two-thirds to 2 million hectares by 2019. The share of irrigation for cereals is expected to leap to 600,000 hectares from 60,000 hectares currently.

In Tunisia, El Majid Ezzar, president of the Tunisian farmers organisation, said it was too soon to gauge the implications of the dry weather.

"This will be a tough year, but we hope there will be enough rains in February and March to save the season," he added.

Tunisia currently imports around 2.4 million tonnes of grains annually including 1.2 million tonnes of soft wheat, but experts and analysts expect trade deficits may widen because of heavier food imports.

Drought would also make it harder for governments to reform their subsidy systems, as requested by foreign lenders.

AMMAN –– Lafarge Jordan has a plan to turn its dusty site for cement production in Fuheis into an "environment-friendly urban hub", but is still waiting decision makers' nod, the company's Chief Executive Officer (CEO) Amr Reda told The Jordan Times Monday. 

The envisioned project, Reda said, would be an entire clean energy city that would include shopping malls, residential and commercial properties, medical facilities and restaurants, describing the scheme as "a great" investment opportunity" for the regional and international developers, the local community and the country. 

Lafarge Jordan is considering the development plan as it seeks economic salvation to problems facing its factories in Fuheis, a town just few kilometres northwest of Amman. The plant  has been non-operational for several years due to pressure of the local community over environmental impact, according to Reda. 

On the value of the project, Reda said it would exceed JD2 billion, indicating that the company sent an official letter to the Jordan Investment Commission in October 2015 informing them about the plan but still has not received any response. 

The size of the land, fully owned by Lafarge, is 1,880 dunums, according to the CEO, who said that the Paris-headquartered leader in the cement and building solutions industry has the expertise and  knowhow to develop environment-friendly schemes. 

"This would be the group's first of its kind project in the world, if approved," he said, adding the company can bring in an international engineering firm to design the project and invite local, regional and global developers to invest.

"If we get government approval for this development project, economic returns for the country and the area would be double. It would create a large number of job opportunities," he said, adding the firm is ready to work on this project as soon as possible.

"We would love to meet His Majesty King Abdullah or Royal Court officials to present the idea,"  he continued.

Reda said the vision for the development project was initiated after Lafarge completed merger with Holcim to create LafargeHolcim, a new leader in the building materials industry. 

"The company seeks a new strategy to end the status quo here," he said. 

‘A heavy inheritance at Fuheis’

"The status quo of losses cannot continue," Reda said when commenting on the halt in operations at the cement factory in Fuheis.

 Established in 1951 as the Jordan Cement Factories owned by the government, Lafarge entered in 1998 as a strategic partner through buying 33 per cent of the government shares.

Now the France-based Lafarge Group owns 51 per cent of the shares, 25 per cent owned by state-run Social Security Investment Fund, while the rest are owned by individual shareholders.

 The company owns two cement plants, one in Fuheis and another in Rashadiyah.

 The factory in Fuheis was described by Reda as a heavy inheritance in terms of dispute with local community over operations and environmental impact and other issues related to labour. 

He said between 2005 and 2009 the company developed the factories to reduce the environmental impact by using the latest technology to monitor emissions to be in line with international standards. Previously, production used to rely on heavy fuel. 

In 2009, competition was allowed and currently there are five factories operating in Jordan. 

Other firms were allowed to use cheaper energy, which is coal, he said, adding that, unfortunately, Lafarge did not have the same privilege due to local community pressure. 

In 2011, Reda said Lafarge established a factory to be run on piteoke in Fuheis but again the local community objected, leaving the two lines of production and 200 engineers and workers in complete halt for several years. 

Rashadiyah factory was allowed in mid-2013 to use coal for production.

"We have to pay JD5 million a year in compensations for the local community as environmental impact. What impact and the factory is not operational?," he asked.

Reda talked about a rising phenomenon, which he described as the mafia of lawyers. 

"If someone buys a land near the factory, lawyers approach landlords to get compensations for them for loss in value of property," he said.  

Despite the fact that factory is not producing, demands of the local community are increasing, Reda complained. 

"Do we still need the factory now? It is unfeasible anymore," he added. 

Asked if LafargeHolcim, which has factories in 90 countries, would consider quitting the Jordanian market, Reda said it could be a possibility if the group comes to a conclusion that it is unfeasible to stay anymore.   

He indicated that the company's accumulated losses between 2010 and 2014 are estimated at JD60 million, attributing losses to operational costs and compensations. 

The company employs 580 people currently, most of them are not needed because its business in Jordan is not fully operational. 

Reda said the company is also burdened by health insurance costs for pensioners that is estimated at JD2.5 million a year. 

The insurance system covers dependent males until 18 and females until marriage. It is a huge legacy as the number of beneficiaries ranges between 5,000 to 6,000 people.  

Cement production

Reda said Lafarge production ranges between 3.9 to 4 million tonnes a year but he expected a drop in demand for cement this year that could reach 15 per cent. 

He attributed the projected drop to an expected slowdown in building activity in the Kingdom in 2016, adding that residential projects consume around 75 per cent of the cement production in the Kingdom. 

ISTANBUL — The lifting of sanctions against Iran may be a mixed blessing for Turkey, opening up access to a fast-growing, lucrative market, but one that could someday rival Ankara as both an investment destination and exporter.

NATO-member Turkey remains the region's economic powerhouse, with output of nearly $800 billion in 2014, well above Iran's $425 billion, and an advanced manufacturing industry that exports televisions, cars and washing machines to Europe.

But Iran, with a similar-sized population, could close that gap, Turkish business leaders say, thanks to government incentives, a well-educated workforce, and vast oil reserves that obviate the need for energy imports.

"It is an economy with great potential," said businessman Alper Kanca, whose company, Kanca Dovme Celik, produced engine parts for Iranian automakers for 20 years prior to the sanctions.

"There is extraordinary support from the Iranian government to expand domestic industry," he added.

After the lifting of international sanctions last month, Iran is now the biggest economy to rejoin the global trading system since the Soviet Union broke up more than two decades ago.

Iranian President Hassan Rouhani says Tehran needs as much as $50 billion a year in foreign investment to meet an economic growth target of 8 per cent. So far, deals worth at least $37 billion have been announced in industries ranging from construction to aviation and auto manufacturing.

In the short term, Turkey's auto industry, which accounted for $22 billion in exports last year, could be a beneficiary, thanks to its advanced manufacturing techniques.

"After working closely with European producers for years, Turkish auto parts producers have an upper hand," indicated Mehmet Dudaroglu, the chairman of the Turkish auto parts manufacturing association (TAYSAD).

"However, Tehran's potential incentives for the industry, as well as lower costs, could make Iran the new competition," he said.

Not a rival

The International Monetary Fund expects Iran's economy to expand 4.3 per cent this year, with growth at or above 4 per cent in the next two years. It also sees Iran's imports expanding 18 per cent this year, 14 per cent next year and 7 per cent the year after.

"Turkey will be one of the countries that benefits the most" from the opening of Iran, Economy Minister Mustafa Elitas told Reuters in an interview in Chile on Monday, while on a visit to Latin America.

Turkey's trade with Iran reached $22 billion in 2012, he indicated, before dropping off sharply in subsequent years as tighter sanctions hit. Ankara aims to reach $30 billion in trade with Iran by 2023, he said.

Elitas added that Iran won't be able to draw as much foreign investment as Turkey because it is less democratic.

"Turkey is the most democratic country in the region and foreign investments will go to democratic nations, to countries that can guarantee those investments," he elaborated. "If Iran advances with its economy, then they could become a rival."

Turkey attracted more than $12 billion in foreign direct investment in 2014, while Iran garnered $2 billion.

Some Turkish steel producers take a less sanguine view of Iran, pointing to its immense oil reserves. Turkey is forced to import almost all of its energy needs.

"The steel industries of both countries are based on nearly the same product range. The Iranians have the potential to export some of what they produce and could compete with Turkish steel," said Namik Ekinci, the head of the Turkish Steel Exporters Association. Steel accounted for 7 per cent of Turkey's total exports last year.

Cement producers are also wary.

"The input with the highest cost is energy. And energy is cheap in Iran," said a senior officer at a major Turkish cement producer. "There's tough competition ahead."

NEW YORK — Alphabet Inc. easily beat Wall Street's quarterly profit forecasts on Monday, helped by strong mobile advertising sales, sending the shares of Google's parent higher in after-hours trading to surpass Apple Inc. as the most valuable US company.

For the first time, the company disclosed the profitability of Google's search engine and its other online services, and how much it is spending on ambitious technology projects such as self-driving cars.

The numbers were lapped up by investors, who saw room for growth in Google's traditional business, and were relieved to see that spending on new projects it calls “Other Bets” was not as lavish as some had feared.

"It's pretty interesting that 80 per cent of YouTube views come from outside of the United States. I didn't think it would be that high," said Kevin Kelly, managing partner at Recon Capital. 

"It demonstrates that the value of YouTube can continue to be extracted," he added.

The operating profit margin for its Google unit was 31.9 per cent in the most recent quarter, compared to 25 per cent for Alphabet.

Alphabet spent $869 million on capital expenditures for the Other Bets in 2015, up from $501 million in 2014. It has not made any projections about if or when those bets cumulatively would become profitable.

"As long as the core business continues to operate well with accelerated revenue... investment in those businesses can continue," said Ronald Josey of JMP Securities.

The company indicated that consolidated revenue jumped 17.8 per cent to $21.33 billion in the fourth quarter ended December 31, from $18.10 billion a year earlier. Analysts had expected $20.77 billion, according to Thomson Reuters I/B/E/S.

Revenue for Other Bets was $151 million, up 29.8 per cent from $106 million in the same quarter last year, primarily from its smart-home monitoring unit Nest, Google Fiber, which provides high-speed Internet access, and its life sciences business Verily.

Adjusted earnings of $8.67 per share handily beat analysts' average estimate of $8.1 per share.

In a call with analysts, Chief Financial Officer Ruth Porat attributed the strong earnings to "increased use of mobile search by consumers", as well as "ongoing momentum" in YouTube and programmatic advertising, referring to the automatic buying of ads.

Kelly at Recon Capital said he would not be surprised if YouTube saw a surge in advertising revenues beyond the 17 per cent increase it saw during the 2015 fiscal year.

Total operating losses on the Other Bets, which include glucose-monitoring contact lenses and Internet balloons, increased to $3.57 billion in the 12 months ended December 31, and $1.2 billion in the fourth quarter.

The Google unit houses its Internet and related businesses such as search, ads, maps, YouTube and Android as well as hardware products such as its low-cost Chromebook laptops.

Google Chief Executive Sundar Pichai said on the call that its Gmail service crossed 1 billion monthly active users last quarter, joining Search, Android, Maps, Chrome, YouTube and Google Play in topping that mark.

He also touted the company's performance during the holiday shopping season, saying that programmatic video impressions doubled this season compared to last, and that 60 per cent of them came from mobile devices.

But Porat, without providing figures, said the company planned to accelerate capital expenditures in 2016 compared to the previous year.

Google's shares rose almost 5 per cent in after-hours trading. Alphabet's combined share classes were worth $549 billion, compared with Apple, which had a value of about $534 billion.

Google's advertising revenue increased nearly 17 per cent to $19.08 billion, while the number of ads, or paid clicks, rose 31 per cent, the company indicated. Analysts had expected paid clicks to increase 21.8 per cent.

Advertisers pay Google only if someone clicks on their ad.

Net income in the fourth quarter rose to $4.92 billion, or $7.06 per Class A and B share and Class C capital stock, from $4.68 billion, or $6.79 per share. 

Adjusted earnings of $8.67 per share excluded certain one-time items.

RIYADH — Saudi Arabia's fiscal reserves dropped to a four-year low last year as the government sought to finance a budget deficit caused by plunging oil revenues, a report said Tuesday.

The reserves of the world's largest crude exporter dropped to $611.9 billion at the end of 2015, the lowest level since 2011, down from $732 billion a year before, the Saudi Jadwa Investment indicated in an economic report.

Jadwa said it expected reserves to fall to around $500 billion by the end of 2016, after oil prices fell by three quarters since mid-2014. 

The kingdom, the second largest crude producer after Russia, posted a record budget deficit of $98 billion last year after oil income dived by 60 per cent to just $118 billion.

Riyadh also projected an $87 billion deficit for this year but Jadwa forecast the shortfall to be more than $107 billion.

To help finance the budget deficit, the kingdom in December 2015, introduced a series of austerity measures raising fuel prices by up to 80 per cent and increasing the prices of electricity, water, natural gas and others.

Jadwa said it expected inflation to soar this year to 3.9 per cent, from 2.2 per cent last year, as a result of the price hikes.

The kingdom also issued bonds in the domestic market worth $30 billion. 

The International Monetary Fund last month revised downward Saudi gross domestic product (GDP) growth to just 1.2 per cent this year, the lowest since 2009. Its GDP grew 3.4 per cent in 2015.

Saudi Arabia is currently pumping 10.2 million barrels of crude per day.

Recently, hundreds of Saudi Arabian officials and businessmen discussed ways to rescue the economy from low oil prices, by developing new industries and giving opportunities to the private sector.

As cheap oil pressures its currency and opens up a record state budget deficit of around $100 billion, Saudi Arabia, assisted by a small army of Western consultants who are believed to number in the hundreds, is plotting its biggest shake-up of economic policy in well over a decade.

Stakes in the operations of big state companies, including national oil giant Saudi Aramco, would be sold off; underused assets owned by the government, such as vast land holdings and mineral deposits, would be made available for development.

ABU DHABI/CAIRO — Rattled by stringent new import rules, Egypt's wheat suppliers boycotted en masse a state tender on Tuesday, pushing the world's biggest purchaser of the commodity towards a crisis that could threaten its strategic grain reserves.

Wheat supplies, critical to a bread subsidy programme that feeds tens of millions, are a red line in Egypt, the most populous Arab country. When Egyptians rose up against autocrat Hosni Mubarak in 2011, a signature chant was "bread, freedom and social justice".

Egypt's state grain buyer, the General Authority for Supply Commodities (GASC), confirmed it received no offers in its tender, and said it was now looking for a direct contract for 3 million tonnes of wheat, something traders described as unrealistic.

"Negotiations are ongoing now for the import of 3 million tonnes outside of the tender process," Mamdouh Abdul Fattah, vice chairman of GASC, told Reuters, without elaborating.

The move by traders to shun Tuesday's tender was prompted by mounting concerns that their shipments would be rejected at the country's ports because of tough new import standards.

"I cannot remember a GASC tender ever being cancelled for lack of offers, certainly not in recent years," one Europe-based trader said.

The shelved tender comes after a 63,000-tonne wheat shipment was rejected by GASC this week for containing traces of ergot, a common grains fungus, despite it meeting the 0.05 per cent threshold allowed by the authority's specifications.

Traders viewed the shipment, supplied by Bunge, as a crucial test for whether Egypt would stick to a stringent new zero-ergot standard they say makes doing business here prohibitively expensive.

"People had expected the Bunge ship to be accepted and there was great concern when it was rejected," the same European-based trader said.

Mixed signals among authorities have deepened concerns.

The supply ministry, which includes GASC, has baffled traders in recent weeks by assuring them their shipments would be permitted with ergot levels up to 0.05 per cent, a common international standard, even as agricultural authorities have rejected all shipments above zero.

Traders say it is impossible to guarantee the complete absence of ergot.

"The risk of bidding in GASC tenders is now too high. It is not possible to guarantee zero ergot content from any origin and the likelihood that cargoes will be rejected is so high that it is not possible to add a risk premium," another trader said.

So far, Egypt has rejected three wheat import shipments due to the presence of ergot, a ministry of agriculture spokesman told Reuters on Tuesday.

Uncertainty over Egypt's reliability as a customer has hit markets at a time of global oversupply, helping push European wheat prices this week to new contract lows.

Suppliers, many of whom have continued to supply Egypt despite payment delays caused by the country's ongoing foreign currency shortage, decided on Tuesday that the added layer of risk brought about by the ergot saga was simply too much.

"Unless Egypt changes its rules it could face trouble importing," said the first European trader.

Critical reserves

Egypt imports around 10 million tonnes of wheat each year, most of which goes to providing cheap, subsidised bread to feed its exploding population of 90 million.

Egypt has said it has enough strategic wheat supplies to last until May 11, but this number includes shipments that had not yet arrived, including the recently rejected 63,000 tonnes.

Much of the country's calculated reserves sit outside Egypt in shipments that still may be rejected, traders said, raising the possibility that reserves could hit critical levels sooner than anticipated.

"This shows how an argument between the two ministries is risking the supply of a strategic commodity like wheat," a Cairo-based trader said. "They have to think of their reserves, if they are counting in the problematic shipments in them the figure is misleading." 

Another Cairo-based trader issued a more dire warning. "This is a matter of national security for Egypt... You cannot leave the country without wheat for bread."

NEW YORK — The oil price crash is mostly a godsend for the United States, delivering American consumers and businesses cheaper gasoline prices while hobbling the economies of adversaries like Russia.

But analysts say that the longer the oil price stays so low, the greater the chances it will generate new geopolitical problems that Washington would not like to see.

Even if the 70 per cent plunge in crude prices has battered the homegrown US oil industry, overall its economy benefits: it remains a net importer of oil and as the price of crude falls, the country's trade imbalance improves.

"There's no question that low oil prices are very good for the US. Painful for some people obviously, but for the US economy and US consumers a very good thing," said Bruce Everett, a former ExxonMobil official and professor at Tufts University.

There are apparent strategic benefits of cheap oil, too.

Countries like Russia, Venezuela and Iran, with which Washington shares chilly relations, are overly dependent on oil exports and their economies have been heavily battered by the downturn.

"If you don't care especially about the [other] oil producers, it's a plus," said George Perry of Brookings Institution. 

But the flip side is that strains from a loss of oil income can trigger destabilising behaviour as well. 

Energy specialist Jan Kalicki of the Wilson Centre posed the question of whether Russia would be less or more troublesome on the world scene if the economic climate worsens.

"The pressure is on Russia from oil prices and their general economic decline," Kalicki indicated. "You could make an argument that the Russians have been influenced to some extent by that in taking stronger steps internationally... in Ukraine or in Syria for example."

That, he said, serves to "take domestic attention away from the economic problems that it is facing".

Convergence of interests 

For Iran, the price fall comes as the country is being permitted to resume a high level of oil exports with the lifting of international nuclear sanctions on the country. 

The net effect, income-wise, is little significant immediate gain for the country, according to Anthony Cordesman, a Middle East and security expert at the Centre for Strategic and International Studies in Washington.

Even at a price of $40 a barrel, some 15 per cent higher than now, the resumption of oil exports won't have a big economic effect for the country of 84 million people.

However, he said, any surge in income could become the focus of an intensified internal power struggle pitting military versus civilian needs, according to Cordesman.

That fight "may become even more serious”, he added.

"The impact of the nuclear agreement on Iran's future petroleum revenues will be far more limited than many thought when the agreement was signed, and Iran will face serious internal pressure over how any additional revenue will be used," he elaborated.

Cordesman raised another potential pitfall from falling oil revenues across the Gulf and other producers: social turmoil as governments are forced to cut spending.

"It's very unclear that stability in the Middle East is going to get better if the same forces which tend to drive extremism, all of which relate to youth unemployment and economic growth and modernisation, are not going to be helped by a decline in oil revenues by exporting states," he said.

Kalicki added that the fall in the oil price hurts US allies too, including Mexico and Canada, both of whose economies depend significantly on crude production.

In that sense, he remarked, oil producers and consumers have similar interests in a firmer market.

"There is a rebalancing going on between purchasers and the buyers," he continued, creating "a convergence of interest developing among countries active in the oil marketplace in a way that it hasn't in the past".

For that reason, the United States needs to be concerned over "the broader impact of lower oil prices on the international economy and on countries trying to fend their way which are not creating issues internationally", he said.

Separately, many Americans are wondering when they will begin to see the benefits of cheap oil.

The technological breakthroughs of hydraulic fracturing, or fracking, have revolutionised the market for black gold, making the United States the world's leading petroleum exporter.

So why do things feel so bleak to many Americans? It may be just a question of timing, some economists say.

"On a net basis, the decline of oil prices is or will be positive for the US economy," said Angel Ubide, a senior fellow at the Peterson Institute for International Economics.

Because the negative impact is "faster and more concentrated in time", people are already feeling it, Ubide added. "If we look at it in two or three years' time, we'll be able to conclude that the decline in oil prices on net was positive. But we need some time for that."

Steve Murphy of Capital Economics sounded a note of caution, however, saying much will depend on how long oil prices remain low.

"The magnitude and duration of the slump in oil prices has far exceeded what we originally expected, and the longer it persists, the harder it is to argue that decline will ever be a net positive for the US economy," he said.

"Lower prices should have boosted real economic growth in the US. Instead, the hit to domestic investment has been unrelenting, while households still haven't spent any of their savings," he added.

US financial authorities, starting with Federal Reserve Chair Janet Yellen, insist that lower gasoline prices should free consumers' purchasing power. Premium gas at the pump is now below $2 a gallon on average (0.48 euros a litre), a seven-year low.

And yet few signs of impact on consumer spending seem to have materialised, even if the American consumer remains the locomotive of today's modest levels of US growth.

Retail sales rose only 2.1 per cent in 2015, according to official figures published Friday, down from a yearly average of 5.1 per cent from 2010 to 2014.

Murphy said Americans have saved $115 billion thanks to cheap gas over the past 18 months, but rather than spending it, "personal saving has increased by $120 billion, suggesting that households have saved every last dime from lower pump prices".

Ubide noted, however, that "once the level of savings is higher, at some point the consumer can use those savings to spend".

There are, in any case, more winners than losers in the United States, according to Reza Varjavand, an economics professor at Saint Xavier University in Chicago.

"Transportation, airlines, consumers — they all win. The losers are mostly overseas," he indicated.

Varjavand noted that stock markets have suffered and "older people who have money in retirement accounts and pensions, they lose”.

"But consumers generally win," he told AFP.

'Temporary,' you said? 

As for industry, the petroleum and manufacturing sectors are suffering.

The extractive industries — mining, coal and oil — lost nearly 130,000 jobs last year, according to the labour department. The number of active wells operating in the United States fell by 68 percent during the year. 

The finances of several US producer states are suffering to varying degrees.

"Alaska, North Dakota, Louisiana, Oklahoma, Texas, West Virginia and Wyoming are all states that will experience some amount of economic or fiscal fallout as a result of sustained low oil prices," indicated a statement from the rating service Standard & Poor's.

Low energy prices will continue to affect the inflation rate, though Yellen has said for months that this will be a "transitory effect". The US central bank wants to see a steadying of inflation around 2 per cent. 

"Transitory can be a long time," Ubide said ironically, adding that the impact on inflation of cheaper and cheaper oil is bound, mathematically, to lessen.

"At some point, the effect of the decline in price is going to disappear from inflation," he said. "The lower the oil price goes, the less impact it has on inflation on an incremental basis."

Some experts, including at Morgan Stanley, don't rule out the possibility of a $20 barrel amid the continued strengthening of the greenback.

Will the savings that American households enjoy because of cheaper oil lead to an easing of wage demands? 

Standard & Poor's seemed to nod in that direction when it noted that "low oil and gas prices provide an offset to still sluggish wage growth".