There Isn’t Enough Natural Gas to Calm Down a Global Price Rally - Bloomberg
Natural gas markets around the globe are rallying as the world’s importers have come to a stark realization: there isn’t enough supply to go around.
A long, frigid winter drained gas stockpiles from Louisiana to Germany, and utilities are struggling to build them back up. But unforeseen supply disruptions and a rebounding global economy are making it impossible to keep up. That’s setting up a desperate scenario as hot summer temperatures approach, and it’s bound to get even worse when demand peaks this winter.
Higher gas prices, which hit a 13-year high in Europe this week, will make it more costly to keep the lights on in Madrid or cool apartments in Tokyo, after scorching heat waves in some regions are already making it more expensive to run air conditioners. The cleaner-burning fuel is the latest commodity to add to the global inflation scare as the price of everything from crude oil to corn and copper surge.
If a gas deficit does develop during the winter months, it could spur European utilities to burn more coal, which has already started happening, and cause China’s power producers to curtail supplies to industries and cause blackouts like it did last winter. Households are set to pay sky-high utility bills and the worst-case scenario -- albeit unlikely -- is they won’t have heating or electricity when freezing temperatures hit.
“Supplies are already very tight, and that could get much worse if there is a cold winter,” said James Whistler, the global head of energy derivatives at Simpson Spence Young, an international commodity and ship broker. “We are seeing strong competition between Europe and Asia, and that is manifesting in the continuous rally.”
Oil rises for 5th week to highest since 2018 on strong demand | Reuters
Oil prices climbed to their highest since October 2018 on Friday, putting both benchmarks up for a fifth week in a row on expectations demand growth will outstrip supply and OPEC+ will be cautious in returning more crude to the market from August.
Brent futures rose 62 cents, or 0.8%, to settle at $76.18 a barrel, while U.S. West Texas Intermediate (WTI) crude rose 75 cents, or 1.0%, to $74.05.
Those were the highest closes for both benchmarks since October 2018 and put both contracts up over 3% for the week.
"Crude prices rallied on an improving demand outlook and over expectations the market will remain tight as OPEC+ is likely to only deliver a small boost to output at the July 1st ministerial meeting," said Edward Moya, senior market analyst at OANDA.
Ebrahim Raisi, the hardliner poised to take power in Iran | Financial Times |
| © Joe Cummings |
Ebrahim Raisi has come a long way. A seller of Islamic prayer beads in his teens, he is now Iran’s president-elect and seen by many as the country’s next supreme leader.
After winning a landslide in last week’s presidential election, on the lowest turnout in such a poll since the Islamic revolution of 1979, Raisi has the task of steering the country through a period which could determine the direction it takes for decades to come.
Although he has a reputation as a hardliner, he sought to strike an emollient tone in his victory speech on Tuesday in the holy city of Mashhad.
While his approach would not be based on “materialism” or “humanisme”, he said, unusually using the English and French words, he would be guided by a desire to protect “human dignity”.
“Agreeing with me is not a condition to work in the government,” he said, “but safeguarding people’s dignity will be the condition.”
Many Iranians regard him as the protégé of Ayatollah Ali Khamenei, Iran’s supreme leader, whose clerical classes Raisi followed as a student. They suspect the results of the election, in which more than half of the eligible voters stayed at home and senior reformist candidates were prevented from standing, were a foregone conclusion.
Raisi has shrugged off such concerns and described the electoral process as “glorious”.
He was born in 1960 into a mid-ranking clerical family in Mashhad in north-eastern Iran, where one of the 12 infallible leaders of Shia Muslims, Reza, is buried. His father died when he was five years old, plunging the family further into poverty.
“I have tasted poverty rather than only hearing about it,” Raisi has said. “I cannot recall [my family buying] one kilo of rice at all . . . or half a kilo of meat.”
When he was 15, he moved to Qom — home to the biggest seminary for Shia clergy — to continue his religious education. He sold beads in the streets to make ends meet.
Raisi’s own accounts of his political activity in the run-up to the 1979 revolution suggest it was limited to visiting the houses of clergy to gather information and distributing revolutionary tracts. He has said he met Ayatollah Khamenei at least twice during this period.
At the age of 23, Raisi married Jamileh Alamolhoda, a university professor and the daughter of the controversial Friday prayer leader of Mashhad who banned live music concerts and women cycling in the holy city.
He earned a PhD in Islamic jurisprudence and private law and after the revolution became a prosecutor in the cities of Karaj and Hamedan. He was transferred to the capital Tehran in 1985 as a deputy prosecutor and was allegedly a member of an execution committee involved in the mass execution of political prisoners in 1988.
In 2017, president Hassan Rouhani said that Raisi’s record contained “nothing but executions and jail sentences”. And in 2019, the US Treasury designated him the subject of sanctions for being involved in “extrajudicial executions” in 1988 and in the regime’s suppression of unrest in 2009.
More than three decades on from the executions, they remain the most significant stain on Raisi’s reputation. But hardliners in Tehran doubt that his background will create problems for the president-elect internationally. Western diplomats say negotiations to revive the Iran nuclear deal will continue. However, their governments could encounter opposition at home, since many relatives of the executed prisoners now live in the US and Europe.
Today, Raisi likes to portray himself as a politician tolerant towards his critics. During the recent election campaign, he declared proudly that as head of the judiciary, a position he has held since 2019, he has not shut down any newspapers, despite all the allegations about his past.
Instead, he said, he has concentrated on tackling corruption among the political elite, for which he has won plaudits from supporters and even critics.
“Compared to other hardliners, Raisi is considered a moderate figure who has no economic corruption in his record,” a reformist analyst says.
His approach towards the key centres of power — such as the supreme leader and the elite Revolutionary Guards — suggests obedience, analysts say.
On policy, he has proposed taking a tougher line on the nuclear negotiations, even though he needs to have crippling US sanctions lifted in order to boost Iran’s battered economy. Helping the poor and bolstering domestic industrial production are his top economic priorities.
If, as many suspect, Raisi intends to use the presidency as a springboard to becoming Iran’s supreme leader when the 82-year-old Khamenei dies, then the next few years will be vital for him. The role could either cost him the ultimate position, as the country struggles with interlocking economic, political and social crises, or pave his way to the very top.
“Raisi has neither the revolutionary background of Khamenei nor his political and cultural stature and public speaking skills,” says a reformist politician. “He will lose this game.”
But a hardline politician in Mashhad insists that all the president-elect needs is more experience. “As it took a long time for Mr Khamenei to be a mature leader and self-confident to stand against the US, Mr Raisi also needs time to become a powerful supreme leader and that can happen.”
Oil prices rise further on tight supply outlook, eyes on OPEC+ | Reuters
Oil prices climbed for a third straight session on Friday, on track for a fifth consecutive weekly gain, as demand growth is expected to outstrip supply on bets that OPEC+ producers will be cautious in returning more output to the market from August.
Brent crude futures rose 6 cents, or 0.1%, to $75.62 a barrel at 0646 GMT, heading for a 2.9% jump for the week.
U.S. West Texas Intermediate (WTI) crude futures were up 5 cents, or 0.1%, at $73.35 a barrel, headed for a 2.4% weekly gain.
Both benchmark contracts settled at their highest levels since October 2018 on Thursday.
"Expectations of tightness in global market is the major factor supporting crude oil as demand is recovering while OPEC+ has constrained supply and U.S. stocks are falling," said Ravindra Rao, vice president for commodities at Kotak Securities.
