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Price cap on Russian Oil Exports - the last resort!

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  The leaders of the world's wealthiest nations, the G-7,  went into what modern motivational speakers call, a brainstorming session, at the weekend in Germany, in order to discuss the global economic outlook, when uncertainty on the same front morphs into frightening forms.  On the top of their agenda, among a few more things, was of course, the war in Ukraine and how to corner Russia over it. The main focal point of the summit that started in a lighter vein with a reference to the photo of the  Russian strong man's bare-chested horseback, was about the War - its inevitable consequences for the global economy and global food shortages. Of course, they have agreed to tighten the grip on Russia further by more sanctions, perhaps in proportion to the frequency of the missiles that rained down on the cities across Ukraine on Sunday. As far as crude oil market are concerned, one of the measures that was said to have discussed is placing a price cap on Russian oil exports to the Wes

Is European winter of discontent in the offing with gas shortages?

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On a determined mission to turn their back on Russian oil and gas, the European countries are simply staring into an abyss of uncertainty in the absence of reliable substitutes for the shortfall.  Before the war broke out, the EU relied on Russia for over 40% of its gas supply; in Germany, the figure is said to be around 55%. Having a good sense of vulnerability of the European Union over its reliance on Russian gas, the world's largest country knows exactly what it is supposed to do in order to safeguard its own interests. Russia, for instance,  has already reduced supply of its gas  to Europe by 60%, citing 'maintenance ' issues, dealing a hammer blow to the need of the fuel in the major economies in the EU, particularly Germany. The growth forecast for Germany, the largest economy in the EU,  has been reduced from 3.5% to 1.5%, raising the spectre of recession; if it reaches the dreaded finale, the cascading effect will be extensive, analysts warn. In response, the EU, a

Oil price dropping by 10% in a week: has the fear of recession taken its toll on it?

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  The price of crude oil went down more than 10% this week, perhaps due to the fears over recessions that could sweep over the top global economies in the coming months, if confirmed by the forthcoming GDP figures for the Q2, the second quarter. Since two successive quarterly contractions spell the much-dreaded word, recession, crude oil markets appeared to have exercised caution, emulating other major markets. In addition, the threats by the Biden administration against major oil companies over hefty profits at the expense of the impact on the economy and his planned visit to Saudi Arabia in July may have played some role in the anxieties that prevail in the markets at present. With the cost of living on a steady upward march, the Western governments failed to inhibit the trend by adopting a catalogue of measures, ranging from duty cuts on fuels to offering subsidies to beleaguered households - all to no avail. Although the fluctuations of the US crude stocks that usually used to reli

President Biden's Trip to Saudi Arabia amidst Rising Oil Prices: will it break the ice?

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With the inflation skyrocketing, the Western politicians have been forced to occupy the enviable space between the rock and hard place, when the spectre of recession appears just on the horizon. The rise of interest rates and the inevitable sequence of events triggered off by it, do not make pleasant reading for those who hold the levers of power either: the Federal Reserve, for instance, resorted to the biggest rate hike since 1994; in the UK, the Bank of England raised the interest rate by 1.25% - the fifth increase in a row. Amidst lingering uncertainty, the cost of fuels is on a steady upward march with no let-up: as of 09:50 GMT on Friday, the price of WTI, Brent and LNG stood at $118.50, $120.69 and $7.45 respectively - a steep rise by a few notches relative to what they were at the same time, last year. Neither the negative sentiments that echo the markets nor the modest US crude build in the past two weeks, brought down the price of crude oil as expected. On the contrary, it we

High Oil Prices: oil companies fear it's not sustainable!

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  It's all about the age-old adage, after all; what goes up, does come down - in the end. The key players in the oil and gas industry, at boardroom level, now feel the current oil and gas prices are not sustainable, because the damage to the global economic growth is already there for all to see.  Harish Madhav, the CEO of Oil India, for instance, firmly believes that crude oil at $120 is not sustainable in the long run; he expect it to come down to $80 - $100 over medium term. Mr Madhav, who heads a major oil company in the world's third largest consuming nation, is fully aware of the trials and tribulations of the industry in the country at present; the inflation, as in other major economies, is rising and its impact on the economic growth is obvious; the Indian government slashed the taxes on oil and gas at the expense of vital revenues for the coffers in order to keep the prices at the current level - as the last resort. Although India too got on the bandwagon of releasing

Thaw in relations between the US and Saudi Arabia: good news for the crude oil markets - at last!

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There are strong indications in Washington that President Biden, after all, is going to meet the Crown Prince of Saudi Arabia, Mohammed bin Salman, leaving many political bigwigs of the Democratic Party in an uneasy lurch. President Biden, who promised to take on Saudi Arabia over its 'human rights record' during the presidential campaign, did partially keep to his promise during the early days of his administration: the US administration halted sale of some advanced weapons to the Kingdom; it even went as far as removing Patriot anti-missile defence system from Saudi Arabia at some point, leaving it highly vulnerable to the Houthi drone and missile attacks, a situation that prompted the latter to borrow them from Greece on short-term basis. In March this year, however, US took heed of the Saudi request to provide it with the antimissile interceptors for the Patriot system and fulfilled the need. In addition, the US influence may have resulted in a fewer attacks by the Houthis

Will the sky-high energy prices put a damper on energy transition?

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Energy Transition: image credit -NextEra Energy The prices of crude oil and LNG, liquified natural gas, went up again on  high  and the obvious absence of the factors that usually bring them down are worrying economists over the impact on the global economy as a whole. In the UK, for instance, it recorded the highest daily jump in price on Wednesday in 17 years.  With the ambitious embrace of renewables failing to bring about the much-needed consolation to the beleaguered consumers, there are ominous warnings from the giants in the energy sector that the enthusiasm for environmentally-friendly alternatives may wane unless the issue is addressed in a pragmatic manner - and soon, of course. Michael Wirth, the CEO of Chevron, for instance, fears that the rise in energy prices at this rate will slow down the transition from fossil fuels to renewables, despite the promises made at the COP26  summit in November, last year -  with plenty of  fanfare ; he went on to say that if the status quo

Multiple Choice Questions for A Level Physics: Thermal Physics

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Multiple Choice Questions - A Level Physics - Thermal physics - Time: 40 minutes Created and Programmed by Vivax Solutions   Start the Quiz   Submit Quiz

Falling oil prices: why is it just wishful thinking?

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  The price of crude oil is steadily rising and on Friday, the primary benchmarks,  WTI and Brent, hit a record high at $118.87 and $119.72 respectively. Neither the decision by the OPEC+ to increase the output by 648,000 bpd for July and August nor the fear of a global recession buckles the trend; as far as the OPEC+ is concerned the estimated figure, based on a previous group decision, for June remains 432,000 bpd. The fact of the matter, however,  is OPEC+ is still restoring the production cuts that it was forced to make, when the oil price crashed at the height of the pandemic in 2020, rather than increasing the net output.  In short, the rise in oil output, claimed by the cartel, is not sufficient to increase the supply in a dramatic way; the supply woes remain the same while the global consumption has already reached the pre-pandemic level. Although economists have been warning about the impact on the global economy as a whole by the surging energy costs and the inevitable slowin

New Equilibrium of Oil Price:$110 a barrel to stay for long...

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  Having crossed the psychologically-sensitive $100 a barrel a few months ago, the crude oil markets are convinced that it is going to be the new-normal for months to come in the current circumstances. As the West has not lost the momentum in tightening the screw of the sanctions against Russia, there is no possibility of oil and gas flowing into the international markets legally from the latter at any time in the foreseeable future.  That means, the serious supply woes are going to continue for a prolonged period, as the major producers are not in a mood to boost the production in order to meet the demand; they simply drag their feet despite being under tremendous pressure - and for the obvious reasons. Both the UAE and Saudi Arabia have shown remarkable growth in the first quarter,  Q1,  in 2022, thanks to high crude oil prices; it was a far cry from what they went through in 2020, when oil prices crashed at the peak of the Covid-19 pandemic and the global demand plummeted in proport

Oil Price: exponential growth of volatility continues unabated...

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  With the partial ban of Russian oil in place in the EU, the scramble for finding alternatives by the major consuming nations is gathering momentum across the world, despite the outcome being far from certain. As of 09:00 on Thursday, WTI and Brent stood at $112.75 and $113.83 respectively with the price of the LNG, liquified natural gas, at $8.80, an increase by over 100% since the war in Ukraine. Judging by many relevant indicators, the supply chaos continues unabated that does not help maintaining the prices at reasonable levels at present.  Amidst the growing uncertainties, the EIA, US Energy Information Administration, reported a modes crude draw on Wednesday; the API, American Petroleum Institute, meanwhile reported a modest build, a day earlier.  Neither had any significant effect on the movement of the crude oil prices, though. It is no secret that the OPEC has come under unprecedented pressure to play its role constructively in a critical global emergency; much to the frustra

Chinese economy slowly reaches the equilibrium after Covid-19 flare-ups

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  China, the world's second largest economy, admitted this week that its economic growth suffered due to Covid-19 flare-ups in major economic hubs like Shanghai. Analysts long anticipated the impact on the Chinese economy due to strict, prolonged lockdowns that followed the escalation of infections; China's stubborn Zero-Covid-19 policy made the strict measures inevitable despite the obvious economic cost. The anxieties that loomed over the energy markets, in this context, are understandable. The price of crude oil, however, continues to go upward unabated. China is the second largest oil consumer in the world and its economic activities determine the sentiments in the fuel markets.  The latest data from the National Bureau of Statistics of China clearly shows that the imports  Chinese economy and energy sector 2022 and LNG, liquified natural gas, have come down during the subdued economic activities.  Chinese activities, however, are optimistic about the prospects of reviving