1. Skyrocketing Energy Costs Weigh on Economic Recovery
- Energy costs are expected to hit an all-time high of 13% of global gross domestic product this year, adding to the inflationary pressure across the globe.
- Despite soaring natural gas prices last year, with Europe seeing a 500% year-on-year hike in spot prices, fossil fuels prices have continued to rise this year.
- Coal witnessed the most marked appreciation so far this year, with both Europe’s API2 and Asia’s Newcastle benchmark up by some 250% from the beginning of the year.
- Global inflation is expected to reach 5% this year, denting hopes of a comprehensive economic recovery in 2022.
2. India Becomes Main Buyer of Distressed Russian Crude
- India has emerged as the key buyer of Russia’s distressed Urals cargoes, having landed some 7 million barrels already in public tenders and probably even more in undisclosed deals.
- This month’s Urals departures to India are four times higher than last year’s average of 80,000 b/d as India traditionally relies on a mix of Middle Eastern medium sour grades.
- Steep discounts for Russian crude, with recent tenders assumed to close at -$20/-$25 per barrel to Dated Brent, combined with rupee payment options, make further Indian buying very likely.
- Meanwhile, coal departures from Russia to India reached their highest level in 2 years in February, averaging 0.9 million tons last…