Russian Oil Boss Warns Donald Trump's Iran Move May Result In 'Unpredictable' Crude Prices

&l;p&g;U.S. President Donald Trump&s;s unilateral decision to withdraw from the Iran nuclear accord could knock 5% of global oil production offline and drive the oil price to unpredictable highs, according to Igor Sechin, Chief Executive Officer of Russian oil giant Rosneft.

Speaking at the St Petersburg International Economic Forum on Friday, May 25, Sechin, who&a;nbsp;is reportedly&a;nbsp;close to Russian President Vladimir Putin, said the U.S.&s;s decision would cause an inevitable reduction of Iranian barrels in the global supply pool.

On a day when oil futures are sliding on expectation of higher Russian and Saudi production - amid signals that the ongoing OPEC and non-OPEC production cut agreement to the tune of 1.8 million barrels per day might be canned - Sechin opined that actually new price records might be on the horizon&a;nbsp;due&a;nbsp;to American unilateral action.

&l;img class=&q;dam-image getty size-large wp-image-962291782&q; src=&q;https://specials-images.forbesimg.com/dam/imageserve/962291782/960x0.jpg?fit=scale&q; data-height=&q;619&q; data-width=&q;960&q;&g;&l;em&g;Rosneft&a;nbsp;CEO Igor Sechin&a;nbsp;speaks at the 2018 St Petersburg International Economic Forum on May 25, 2018 (Photo: Sergei Bobylev/TASS via Getty Images)&l;/em&g;

&q;Such&a;nbsp;sanctions and ultimatums applied to the hydrocarbons market will inevitably lead to a permanent &s;sanctions premium&s; in the price. I do not rule out that we will be able to speak about a sanctions-related commodity &s;super cycle&s; after a while, and see new price records in the near future,&q; the Rosenft boss said.

Drivers and industries across Europe and the U.S. will feel the effects of &l;a href=&q;http://www.forbes.com/sites/gauravsharma/2018/05/08/trumps-withdrawal-from-iran-deal-will-create-fresh-oil-supply-kerfuffles/&q;&g;action taken by the White House&l;/a&g;, as the revoking of the Iran Nuclear deal &a;ndash; &q;a non-market factor&q; makes the global oil sector unpredictable,&a;nbsp;he added.

&q;I have to say that the U.S. has consistently pursued the policy of non-acceptance of international agreements, which would allow challenging their actions on global platforms. In fact, judicial protection and fair market arbitration are off the table.&q;

Sechin did not mention Trump directly in his address but said the U.S. move had much to do with boosting its domestic oil market confidence.

Moving away from the politics of the Iran deal withdrawal by Trump, the Rosneft boss also dismissed suggestions of oil consumption peaking in 2030, adding that he expects oil and gas to remain core of the global economy in the foreseeable future.

&q;Projections by leading analysts and companies, including an outlook on global energy development recently released by BP show that the demand for hydrocarbons will be higher by 2040 than it is today, even in most challenging scenarios.&q;&l;!--nextpage--&g;

According to Sechin, oil market participants will have to replenish up to 40 million barrels of falling volumes of resources per day by 2040, which will &q;require a stable and massive inflow of investment in the sector&q; that Russia was actively playing its part in.

The Rosneft CEO&s;s comments come on a day of heavy declines in oil futures prices with the slide starting in Asia, extending well past European trading hours and into U.S. intraday calls. Further downside pressure came, after the weekly Baker Hughes rig count indicated the U.S.&a;nbsp;tally was up 13 rigs from last week to 1,059, with oil rigs up 15 to 859, indicative of&a;nbsp;rising U.S.&a;nbsp;crude production.

At the time of writing (18:08 BST / 13:01 EST), the Brent front-month futures contract was down 3.05% or $2.40 to $76.39 per barrel, while the West Texas Intermediate was down 4.07% or $2.84 to $67.87; with both contracts well below their recently recorded three-year highs.&l;/p&g;

Buy IOC; target of Rs 263: Motilal Oswal

Motilal Oswal's research report on IOC

IOCL��s adjusted EBITDA declined 10% YoY (grew 9% QoQ) to INR76b, in line with our estimate of INR75b. At INR110b, reported EBITDA beat our estimate of INR89b, led by higher inventory gain of INR34b. Reported PAT grew 40% YoY (declined 34% QoQ) to INR52b (our estimate: INR48b), led by (a) 13% YoY (99% QoQ) growth in interest outgo to INR13b (our estimate.

Outlook

IOCL is trading at 7.1x FY20E EPS of INR21.7 and 4.8x FY20E EV/EBTIDA. We value refining at 6x EV/EBITDA, marketing at 7.5x EV/EBITDA and pipeline at 7.5x EV/EBITDA; we reiterate Buy with a target price of INR263.

For all recommendations report,�click here

Disclaimer:�The views and investment tips expressed by investment experts/broking houses/rating agencies on moneycontrol.com are their own, and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.

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Microsoft Acquires Semantic Machines for Conversational Artificial Intelligence

Earlier this month at its I/O developer conference, Alphabet (NASDAQ:GOOG) (NASDAQ:GOOGL) subsidiary Google wowed everyone by demonstrating a new conversational artificial intelligence (AI) technology called�Google Duplex, a system that will become part of Google Assistant and will allow the virtual assistant to make phone calls on a user's behalf. The demonstration was striking because it sounded uncannily human, which has raised all sorts of ethical questions.

Microsoft's�(NASDAQ:MSFT) virtual assistant Cortana has some catching up to do (in more ways than one), and the software giant has just announced a new acquisition to that end.

Cortana in Windows 10. Image source: Microsoft.

Scooping up Semantic Machines

Microsoft is acquiring�Semantic Machines, a small start-up based in Berkeley that specializes in conversational AI. The goal is to help virtual assistants evolve beyond just simple commands and allow them to better understand broader context and have ongoing conversations with users. This is currently one of Google Assistant's greatest strengths over competing virtual assistants like Apple's�Siri.

The company is getting significant talent with the acquisition, including Larry Gillick, who served as Apple's chief speech scientist for Siri until late 2014, according�to his LinkedIn profile. Gillick is Semantic's chief technology officer. Semantic's team also includes engineers that helped work on Google's early virtual assistant efforts back when it was branded Google Now.

Conversational AI doesn't just refer to spoken conversations, but also includes the text-based conversations that users may have with virtual assistants. For example, Windows 10 features a text-based interface for Cortana right in the Start Menu. Conversational AI does involves aspects of the technology like speech recognition and natural language understanding, which Microsoft includes in cognitive services�on its Azure cloud computing platform. The company says over 300,000 developers use these services currently.

Cortana is Microsoft's consumer-facing virtual assistant, but cognitive services is arguably more important as Microsoft continues to shift its focus toward emphasizing the enterprise and growing its Azure platform. Azure revenue soared�93% last quarter.

There's also the new generation of chatbots�that tech companies are trying to develop that can potentially handle tasks like customer service, although Microsoft had a particularly offensive misstep�with one of its first such chatbots in 2016. Semantic Machines will undoubtedly help on this front as well.

No financial terms were disclosed, as the deal looks to be a pretty small acquisition of a small team of researchers. But considering the depth of expertise that Microsoft is getting, the acquisition is a no-brainer.

Snap Is Doubling Down on Its App Redesign But Investors Should Stay Away

Shares of Snap (NYSE:SNAP) lost over 20% of their value following a disastrous first-quarter earnings report, as investors punished the Snapchat maker for worsening operating trends. The company has now lost more than half its value since its initial public offering one year ago.

Meanwhile, CEO Evan Spiegel remains determined to maintain most of the company's controversial app redesign, despite admitting that it has hurt results and is driving users away. During the conference call with analysts to discuss Snap's performance, Spiegel said: "The redesign lays the foundation for the future of both our communication products and our media platform, and we look forward to doubling down on both."

Manament's stubbornness could be a sign that the company's struggling user growth might not pick up any time soon. And investors would be smart to stay away from the social media company.

Growth has plateaued

Snap's early user growth rates made the company a�highly anticipated IPO last year, but Snapchat's daily average user growth is down significantly, particularly sequentially.�

Data source: Snap quarterly SEC filings. Chart by author.

While no company can expect to grow at exponential rates for an extended period of time, reaching this growth deceleration this early in Snap's life cycle could signal long-term trouble.

First-quarter daily active users hit 191 million, a 15% gain from the year-ago period, but that was only 4 million more users than the number reached in the fourth quarter -- a 2% gain.

Spiegel admits this dramatic slowdown is due to the app redesign, but he says it shouldn't be unexpected: "As we have mentioned on our past two earnings calls, a change this big to existing behavior comes with some disruption."

Although the redesign was supposed to help Snapchat fight back against Facebook (NASDAQ:FB) and its Instagram and WhatsApp offspring by bringing in a broader audience, it instead sparked criticism from users with significant followings, including Kylie Jenner and Chrissy Teigen. By highlighting friends and family while segregating influencer accounts, it created a dysfunctional feel that launched an online backlash.

The sales channel has been disrupted

Spiegel also allows that the change is creating "some apprehension" among advertisers, who cut back on spending on Snap's Lens and Filter products.�AdAge notes that advertisers were already unhappy because average view time with ads was less than two seconds, which may be why Snap just added six second unskippable ads that are interspersed throughout videos in its Shows section.�

Because Snap derives virtually all of its revenues from ads, this unease among advertisers is a big problem.

On top of those issues, publishers are reportedly frustrated with the app. The magazine New York reported that some outlets are seeing their traffic drop by half following the redesign. Publisher content can increase the amount of time users engage with the app and can give Snap more opportunities to serve up ads.�

Revenues in the first quarter rose 54% to $231 million, but that was 6% below the $245 million analysts had been anticipating; it was 19% less than in the fourth quarter, which Snap said was partially due to seasonality, but also because of the app's redesign. And CFO�Drew Vollero�didn't ease any concerns when he said investors could expect the second quarter's growth rate "to decelerate substantially from Q1 levels."

The company has added new Snapchat features that it hopes will drive more ad growth, but some may cause more problems than resolve them. Snapchat's new "Shoppable AR" (augmented reality), for example, is a pair of sponsored lenses that also function as ads that let users take an action, like purchase a product or download an app. It's essentially placing ads front and center in the camera, the most used part of the app, which may turn off users who feel they're already being bombarded with ads.

Snap also opened a storefront that's being used to sell plush toys and T-shirts. Eventually it's expected it will sell more than tchotchkes -- including items like its Spectacles glasses, which the company insists on reviving.�

Snap's Spectacles reboot won't help sales. Image source: Snap.

A lot going against it

Not everything was a critical failure for Snap this quarter -- the company narrowed its net losses to $342 million from $2.2 billion last year.�But with the expected revenue growth slowdown and a chaotic app redesign in the works, the company's future is hard to forecast.

The fact that Snap also let go 7% of its workforce in March, mostly in the sales department, doesn't bode well for the company's future, either.

But what may hinder the company's recovery most is management's refusal to admit it made a mistake. Yes, it has tinkered with the app's redesign by allowing some users to see friends' content alongside that of celebrities and commercial interests again, but by saying Snap is going to "double down" on the redesign, Spiegel indicates he has no intention of going back to the way things were.

Snapchat is still a popular social-media platform for young adults, and in some surveys the vanishing-message app continues to grow as Facebook fades. Yet investors need to buy into management's vision if they want to own the stock, and right now it doesn't seem like Spiegel and company understand what its users want.