22, February 2022
Gas exporters working for ‘reliable’ supplies as Ukraine crisis worsens 0
Qatar’s emir said major gas exporting nations were working to ensure “credible and reliable” supplies as he hosted a forum overshadowed by the worsening crisis in Ukraine on Tuesday.
Sheikh Tamim bin Hamad Al-Thani said the 11-nation Gas Exporting Countries Forum, which includes Russia, was striving to preserve stability in world markets, which have been rocked by growing fears of a conflict.
But the group made no immediate promise of extra production for Western Europe, which has sought alternatives to Russian gas as the crisis drives up prices and threatens supplies.
Russia is a key member of the forum, which is taking place after Moscow ordered troops into two rebel regions of Ukraine, prompting international condemnation.
Russian Energy Minister Nikolay Shulginov made no reference to the tensions but he told the forum that “Russian companies are fully committed to existing contracts” for gas supplies.
Russia currently accounts for 40 percent of gas used in Europe, and Qatar five percent.
The United States has asked Qatar to help Europe if Russian gas is cut. But Qatar and other producing countries insist that there are no major reserves that can be diverted to Europe, now paying record prices, unless existing customers, mainly in Asia, agree to give up promised supplies.
Qatar’s emir said forum countries were “working hard to ensure a credible and reliable supply of natural gas to world markets and preserve the stability of those markets”.
The emir and other speakers called for closer contacts with consumer markets to ensure a stable supply of gas, which the forum has been pushing as an essential part of the global drive towards cleaner energy.
The summit was also attended by presidents and prime ministers from Algeria, Iran, Mozambique, Equatorial Guinea and Trinidad and Tobago.
Iran’s President Ebrahim Raisi said his country wanted to increase production and exports but was being held back by what he called “cruel and unnatural” US sanctions against his country.
Major powers are negotiating with Iran to revive an accord regulating its controversial nuclear programme that could provide relief from the crippling sanctions.
Even before the sharp rise in energy prices over the past year, the major gas-producing nations had said they needed long-term contracts to ensure a guaranteed supply to consumers.
The European Union has until recently resisted 10, 15 and 20 year contracts typical in the industry. But Qatar and others say that the massive investment needed to increase production meant they need long term deals.
Source: AFP
24, February 2022
Oil prices soar, stock market slumps as Russia invades Ukraine 0
Oil prices broke above $100 a barrel for the first time since 2014, stock markets slumped and the rouble hit a record low on Thursday after Russian President Vladimir Putin launched an invasion of Ukraine.
Markets displayed all the predictable reactions. Europe’s main stock markets opened 2.5%-4% lower and benchmark government bonds, the dollar, Swiss franc, Japanese yen and gold all rallied in a move to safety.
Putin said he had authorised what he called a special military operation and the Ukraine government accused Moscow of launching a full-scale invasion.
The United States and its allies will impose “severe sanctions” on Russia after the attacks, U.S. President Joe Biden said. Europe’s leaders said they would freeze assets and shut Russian banks out of its financial markets. Russian and Ukraine markets went in freefall.
The rouble weakened nearly 7% to an unprecedented 86.98 per dollar and there were 10% plus falls on the Moscow stock exchange when it opened after an initial suspension. The Russian central bank then ordered a ban on short selling and over-the-counter markets until further notice.
The equities rout had started with a 2.6% dive for pan-Asian indexes. Europe’s STOXX 600 index then fell 2.75% – hitting its lowest since May 2021 and 10% below a January record high.
The German DAX fell 3.7%, bearing the brunt of the sell-off due to heavy reliance on Russian energy supplies and the amounts its companies sell to Russia. The surge in oil prices helped limit losses on the UK’s commodity-heavy FTSE 100, although it still slumped 2.3% and futures markets pointed to similar falls for Wall Street later.
S&P 500 e-minis were down 2% and Nasdaq futures were 2.8% lower, which if it materialises, would confirm the tech-focused index it is in a so-called ‘bear’ market.
“In the past when you have had geopolitical flareups you tend to have a very volatile periods on markets then normalisation, but it’s difficult to assess when we will get that,” said LGIM portfolio manager Justin Onuekwusi.
The dollar index was up 0.5%, in the currency markets.
Assets have seen a sharp increase in volatility over the deepening crisis, with the Cboe Volatility Index, known as Wall Street’s fear gauge, up more than 55% over the past nine days.
Brent crude futures, jumped more than 3.5% to shoot past $100 a barrel for the first time since September 2014.
West Texas Intermediate leapt 4.6% to $96.22 per barrel, its highest since August 2014, while gold jumped more than 1.7% to hit its highest level since early January 2021.
That dive for safety also saw yields on Germany’s AAA-rated government bonds drop eight basis points to 1.139%, the lowest in three weeks.. the benchmark U.S. 10-year yield was down sharply too, going as low as 1.86% from its U.S. close of 1.977% before edging back up to 1.90%.
Investors have also been grappling with the prospect of imminent policy tightening by the U.S. Federal Reserve aimed at combating surging inflation. The question now is whether the conflict will give central bankers a reason to delay those moves or whether the further rise in energy priced could spur them on.
While expectations of an aggressive 50-basis-point hike at the Fed’s March meeting have eased, Fed funds futures continue to point to at least six rate hikes this year.
“Markets are now more adequately pricing in the risk of something horrific happening. That combined with the uncertainty is a horrible environment to be in. No one wants risk exposure when that’s floating around,” said Rob Carnell, head of Asia Pacific research at ING.
Source: REUTERS