An Alternative Approach.
A game of footsie.
“Succinct and smart…News Items boils it down like no other newsletter.” — Tom Freston, Firefly3 LLC and author of “Unplugged - Adventures from MTV to Timbuktu”.
European gas prices surged 30 per cent to their highest level since the conflict began, while oil hit $114 in early London trading as tit-for-tat strikes on energy infrastructure in the Gulf rattled markets.
Donald Trump earlier on Thursday warned that the US would “blow up” Iran’s South Pars gasfield if Tehran carried out further attacks on energy assets in Qatar.
The president insisted there would be “no more attacks” on the South Pars gasfield by Israel unless Tehran “unwisely” targeted Qatar, as he sought to prevent a further escalation in strikes.
Higher oil and gas prices hit stocks and bonds, with yields on UK, German and US government debt all rising. The Stoxx Europe 600 was down 1.1 per cent.
Qatar said Iran had inflicted “extensive further damage” after missile attacks around the Ras Laffan terminal, the world’s largest liquefied natural gas facility, in the early hours of Thursday. This followed an attack on Wednesday as Iran retaliated against an Israeli attack on its South Pars gasfield, the world’s largest.
A fire broke out on a vessel east of the Strait of Hormuz after being hit by an “unknown projectile”, the UK’s maritime agency said. (Source: ft.com)
2. Oilprice.com:
A month ago, any analyst suggesting international oil prices could soar all the way to $200 per barrel would have been laughed out of the studio. Now, some are beginning to acknowledge that this is a real possibility, and with good reason.
Oil and fuel exports from the Middle East stood at 25.13 million barrels daily in February, Reuters reported this month, citing data from Kpler. By mid-March, this had plummeted by close to two-thirds, to 9.71 million barrels a day. Vortexa has even more worrying figures, putting the February daily average at 26.1 million barrels of crude and fuels, and the mid—March average at just 7.5 million barrels daily.
Yet even worse than daily shipments is the situation in production. Everyone in the Middle East is cutting oil production—and those wells take a while to restart. The reason they are cutting is that storage capacity is limited—and some of those “export” barrels are actually going on tankers for storage rather than shipment to clients. A fifth of global oil, in other words, is severely disrupted, and even if the bombs stop flying tomorrow, it will take a while for things to get back to normal. (Source: oilprice.com, reuters.com)
3. Carlyle:
When you lose supply, you borrow barrels from the future – they come out of storage. But there is a hard limit: the bottom of the storage tank. This is why prices skyrocketed to over $120 per barrel in early 2022, when Russian supply was sanctioned just as inventories were reaching cycle lows. This was the painful price required to force the market into balance from the demand. This shock was minor in comparison to what we are currently experiencing. This time we may need to ground planes, shut chemical plants, and accept lower crop yields for something we cannot replace. We believe the borrowing capacity could be exhausted in less than two months at this pace, at which point the lack of inventory will force painful choices. (Source: carlyle.com)
4. JPMorgan (via Financial Times):
