US Winter Storm Increases Oil-Fired Power Generation & Russia’s Threat to Cut Oil Output is Tax-Related

Also in this week’s newsletter: The impact of China’s COVID wave on supply chains, EU LNG imports, and ISIS attacks in northern Iraq

MAIN TAKEAWAYS

• The impact of the brutal winter storm on US energy markets carries several lessons for policymakers and traders. The switch to oil for power generation in some areas revealed the ongoing need for fossil fuels and the difficulty of ditching oil.   

• Amid the severe storm hitting the US, we expect prices of diesel and heating oil supplies to continue increasing. 

• The global competition between various energy resources is unprecedented, fueled by tightness in all energy markets, and efforts to make LNG a global commodity.

• China’s COVID wave is affecting supply chains and raising uncertainties regarding oil and LNG demand.

• Russia’s threat to slash oil production is tax-related, but it is being presented as a retaliation against the G7-led price cap on Russian seaborne crude oil exports.

• LNG imports from Russia and the US have enhanced Europe’s energy security.

• Although the latest ISIS attack in northern Iraq, near the oil-rich city of Kirkuk, had no impact on oil operations, the militant group remains a serious threat.