Sunak’s backpedaling on climate has collapsed the UK carbon price, just as the EU soft launches its carbon border tax

As a result UK exporters (including wind farms!) will eventually transfer £££££ to the EU that once would have flowed to the exchequer 🇬🇧
ft.com/content/53e91a…
This is going to be a massive issue. The carbon price or UK ETS isn’t particularly well understood in UK political circles.

But if you break it there are big consequences

UK carbon price used to be at parity with the EU ETS. Now? It’s < half its value

Opec has once again banned reporters from BBG, Reuters and the WSJ from attending its events - including next week's Opec Seminar at Vienna's Hofburg Palace

Sponsors of the event include TotalEnergies and OMV, while speakers include BP's Bernard Looney and Vitol's Russell Hardy There's a host of western blue-chip energy companies attending, including the CEOs of Occidental, ENI and Halliburton, who are appearing on stage.

We've approached all the companies for their thoughts on speaking at an event that has barred a large chunk of the western media

Put another way: the sixth largest economy in the world is right now generating ~90% of all its electricity from green sources - possibly ~95% if you presume the imports from France are primarily coming from nuclear generation

Don’t let anyone tell you it isn’t possible

https://twitter.com/OilSheppard/status/1607880631819853827

And living in the UK you wouldn’t have a clue unless I was nerdily tweeting about it and you have the misfortune of following me

(Cue massive blackout as a French interconnector cuts off and one of the few gas plants running trips offline)

The UK looks sets to spend somewhere in the region of £150 to £200 billion pounds over the next couple of years subsiding runaway gas and electricity costs for households and businesses.

It’s a big number. A very big number.

To understand just quite how big, read on… With ~£200bn you could cut income tax to 0% - zero - for an entire year.

No income tax out your pay packet for 12 months. That would be pretty sweet, right?

As disturbing as it delusional, to the point where you start to question whether this is what Russia’s allegedly elite thinkers genuinely believe (even if recent history suggests we should listen clearly to what they say, even when we find it preposterous).

https://twitter.com/MacaesBruno/status/1510161750787821576

There’s a seam of paranoia about the West having it in for them, despite almost all evidence suggesting a willingness to trade and rub along together, however awkwardly, rather than any grand ambition to see Russia overwhelmingly diminished

This is quite fascinating and illustrates the degree of public pressure Shell is under - and also why many companies have effectively self-sanctioned when it comes to Russian oil. Few thoughts...

https://twitter.com/thomas_m_wilson/status/1500166289125519371

Whether by direct request or design of the sanctions, Shell believes western governments want oil traders to keep buying Russian oil to ensure security of supply. That’s arguably fair enough - the sanctions have avoided hitting energy flows, so not only are no laws being broken..

Oil above $100/bbl for first time since 2014 as Russia begins full-scale invasion of Ukraine, but it is gas prices that are really soaring.

While crude up ~6%, gas prices in Europe have surged ~20% - though so far flows from Russia appear to be continuing, including via Ukraine A lot of the gains in gas are coming not just in contracts for immediate delivery but for those months down the line, as threats to supply increase from the invasion - and the impact of likely retaliatory sanctions, even if designed to avoid directly hitting energy trade

People are struggling with this so let’s break it down.

In the event of a severe gas supply disruption in Europe are countries like Japan and S. Korea going to stop imports of LNG entirely to free cargoes up for Europe? Absolutely not.

But will they defer *some* cargoes?

https://twitter.com/OilSheppard/status/1491318745033486336

Quite possibly.

Japan/SK would need to maintain imports at a level high enough to meet heating needs first and to supply gas-dependent industries.

But that doesn’t mean there’s zero flexibility. In a crisis you can run a system on thinner margins. Less gas in storage...

Does there come a point where the government is better using its heft to secure long-term gas supplies rather than taking on a giant, largely unhedged liability?

UK looks at payments to energy suppliers to shield consumers from high bills ft.com/content/87beed… Under this proposal they would, in theory, receive additional payments from suppliers when prices are lower to compensate.

But in many ways we’re seeing a consumer price cap morph into a supplier price cap - with the government accepting potentially unlimited risk to the upside

Centrica warns gas prices in the U.K. and continental Europe could spiral higher from already record levels this winter, with consumers effectively in a bidding war with Asia for limited supplies

It could get so bad some industries may need to shut down

ft.com/content/0c3650… The U.K. government admits that while the U.K. has highly diverse supply options it’s also highly exposed to international prices.

There’s no short-term solution in sight, beyond hoping for a mild winter and encouraging consumers to ‘shop around’

The gas crunch hitting the UK and Europe now means prices are between 5 and 6 times higher than they were in September 2019.

This is feeding through to effect everything from household electric and heating bills to the cost for industry

ft.com/content/7bf23d… We reported before that Russia appears to be limiting supplies into mainland Europe, ahead of Nord Stream 2 approval/startup.

This remains an issue, with gas in storage at low levels in Europe and winter just around the corner.

It’s that wonderful point in every Scotland fan’s life where we start calculating just how we’re going to go out on goal difference, even if we somehow beat Croatia

The following is predicated on Scotland winning by a single goal. Here’s who to back in the other groups... #SCO In Group A, where the final games are ‘live’, we really want Turkey to come from behind to either beat or draw with Switzerland.

If it stays 1-0 Switzerland will have same points & GD as Scotland, but more goals scored (if Scotland win 2-1 comes down to disciplinary record)

#SCOOP

Vitol: the inside story of the oil crash

The top oil trader has been dogged for months by rumours it lost big in oil crisis.

Here’s what really happened:

* Losses on derivative bets Feb/Mar
* Q1 net income down 70% to $180m

W/ @humenm #OOTT

ft.com/content/a8616e… Some of the company’s traders thought the worst of the oil demand hit was over by mid-February as China appeared to be getting coronavirus outbreak under control.

We all know what happened next.

* Saudi-Russia price war
* Coronavirus goes global
* Oil demand crashes #OOTT

Oil traders picking over the bones of last week’s plunge into negative prices for WTI have highlighted one area of interest - record volumes of “trading at settlement” contracts were executed that day, largely, they say, before prices went below zero #OOTT Volumes of so-called TAS contracts were more than four times higher that Monday than on any day in 2019, and would be consistent with a large, not-particularly-sophisticated ETF or other oil-linked product looking to close out its position. #OOTT

ft.com/content/857515…

The numbers show why Saudi Arabia’s attempt to blame Mexico over 300k b/d might not fly in US

S.Arabia oil output in February = ~9.8m b/d

S.Arabia current output = ~12.3m b/d (up 2.5m b/d)

S.Arabia’s new baseline for calculating Opec+ deal = 11m b/d (1.2m > Feb output)

#OOTT The baseline adjustment for Saudi Arabia up to 11m - which other Opec+ members agreed to - still means they’re cutting almost 1m b/d less than if they hadn’t launched the price war.

Based off on 9.8m b/d a 23% cut would have meant going down to 7.5m, not 8.5m b/d #OOTT

Provisional list of attendees for emergency meeting of G20 energy ministers on oil collapse, according to people familiar with the matter:

Minister level:
US
Japan
China
India
Brazil
UK
Canada
Mexico
Australia
Turkey
S. Arabia
Russia

Reps:
Germany
Spain
Italy
S. Africa #OOTT This may change as it's a fast-moving picture, but this is current expectations

In terms of Trump's 10-15m barrel a day production cut they are hopeful of getting up to higher end of that range, including contributions from countries whose industries run by private sector #OOTT