Global Economy and Energy Markets Weekly Commentary – 14th Mar ‘21

Christof Rühl, member of the Advisory Board of Crystol Energy and a Senior Fellow at the Harvard Kennedy School and the Center on Global Energy Policy at Columbia University, discusses the latest global economic developments in this weekly interview to the Gulf Intelligence.

Everything seems to have been priced in; stock markets are extremely high and the US stimulus has been passed. The only question is how big the boost in demand will be. We have a big divergence between the EU where there is talk of a third wave of the pandemic, and other parts of the world like the US and some countries in Asia, which have witnessed good progress in their vaccine programs. Either way, the market has hit an apex and so we are probably in for a short-term correction.

We are also on unstable ground, with financial markets and the US Federal Reserve disagreeing on pending inflation and similarly, differing opinions on whether OPEC should start releasing supply at these price levels.

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On global oil markets, there are two misconceptions today. One is that shale is dead, but it is not – technologies and financial resources are not constrained. Secondly, there’s still plenty of spare capacity available. We may have had remarkable discipline on supply and cheating so far but these can play out as the demand story shifts. OPEC will need to release oil onto the market at some point because driving prices higher will just result in short-term spikes.

On the political front, it will be interesting to see any fallout from Europe’s disastrous vaccination program strategy – a whole new playbook of unlikely coalitions could emerge as a result. How countries that are more advanced on the road to vaccination will open and connect to others will also be one to watch.

Christof is joined by Dr Aldo Flores-Quiroga, Former Deputy Secretary of Energy for Hydrocarbons, Ministry of Energy, Mexico. Sean Evers, Managing Partner at the Gulf Intelligence, moderates the discussion.

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