{"id":544491,"date":"2022-03-07T04:00:22","date_gmt":"2022-03-07T04:00:22","guid":{"rendered":"https:\/\/enterpriseam.com\/egypt\/2022\/03\/07\/this-morning-us-floats-russia-oil-ban-oil-market-freaks-out\/"},"modified":"2022-03-07T04:00:22","modified_gmt":"2022-03-07T04:00:22","slug":"this-morning-us-floats-russia-oil-ban-oil-market-freaks-out","status":"publish","type":"post","link":"https:\/\/enterpriseam.com\/egypt\/2022\/03\/07\/this-morning-us-floats-russia-oil-ban-oil-market-freaks-out\/","title":{"rendered":"THIS MORNING: US floats Russia oil ban; Oil market freaks out"},"content":{"rendered":"

Good morning, wonderful people. <\/strong>It\u2019s another packed issue today, with fallout from Russia\u2019s war in Ukraine still dominating the headlines here at home.<\/p>\n

<\/a> Remember that historic commodities shock we mentioned yesterday? Apparently not<\/strong> historic enough, according to the folks in Washington<\/strong>, who are now debating an oil + gas blockade on the world\u2019s second-largest producer.<\/p>\n

Brace:<\/strong> In the early hours of this morning Brent crude surged to highs not seen since 2008 after US Secretary of State Anthony Blinken announced that Washington is in \u201cvery active<\/a>discussions<\/a>\u201d with allies about implementing an embargo on Russian oil and gas in retaliation for its military campaign in Ukraine. The move may have support in Congress<\/a>. The markets reacted as you\u2019d expect: The cost per barrel spiked 18% to briefly hit USD 139 when the market opened. It has since retreated to USD 129.1 (+9.2%) as of dispatch time.<\/p>\n

Are they serious?<\/strong> Until now, the idea of banning Russian oil has (for good reason) been off the table. Moscow supplies 17% of the world\u2019s gas and 12% of its oil into an already-tight market reeling from the conflict as well as post-covid demand adjustments. Shutting off Russian hydrocarbons would be tantamount to seppuku for the energy-stricken EU, which sources some 40% of its gas from Russia. The inflationary blowback on the US and the UK, both of which are already facing soaring energy costs, would also be severe. The move is particularly tricky for Biden, who is facing growing criticism at home over his administration\u2019s handling of fuel prices which are now at their highest level since 2008<\/a>.<\/p>\n

And: We hope Western policymakers are cognizant of a world outside of Russia.<\/strong> The war is already causing shockwaves in the developing world, with food, raw materials and energy prices already at levels not seen in decades. The IMF last week warned<\/a> that the war and subsequent sanctions on Russia will have a \u201csevere impact\u201d on the global economy, and that was before Blinken floated the potential oil ban.<\/p>\n

The stock markets are reacting with similar shock: Asian markets are deep in the red this <\/strong>morning<\/strong> with the Hang Seng suffering the heaviest losses (-3.6% as of dispatch time). Things don\u2019t look any better for Europe and the US where stock futures are a sea of red.<\/p>\n

*** HATS OFF THIS MORNING to Mohamed Maait, Ali El Moselhy and Tarek El Molla.<\/strong> The three ministers have been on point for more than a week now, and their transparency about how the government is managing rising prices of oil and wheat (as well as the logistics of a tricky global grain market) is refreshing. Once upon a time, we would have been burying our collective head in the sand instead of admitting that what\u2019s happening now is a challenge to navigate \u2014 let alone explaining impact and strategy in public.<\/p>\n

SIGN OF THE TIMES #1- Vulture funds are starting to snap up Ukrainian and Russian <\/strong>debt<\/strong>, the Wall Street Journal<\/a> reports in what it\u2019s billing as an exclusive. You know it was just a matter of time\u2026<\/p>\n

SIGN OF THE TIMES #2- Moscow\u2019s loss is Dubai\u2019s gain. <\/strong>Goldman Sachs is moving staff out<\/a>of Russia to Dubai<\/a>, which serves as the bulge bracket stalwart\u2019s hub in our neck of the woods.<\/p>\n

^^ We have more on how the war is impacting Egypt<\/strong> in this morning\u2019s news well, below,<\/p>\n

WHAT\u2019S HAPPENING TODAY- <\/strong><\/p>\n

PSA #1- You can now get your second covid vaccine or booster shot at any <\/strong>vaccination center, <\/strong>according to new rules<\/a> announced by the Health Ministry yesterday.<\/p>\n

There\u2019s one caveat:<\/strong> You can get it anywhere only if you haven\u2019t received a text message directing you to a specific location. Adults over 65 can get their booster three months after their second dose, while those under 65 should wait six months before getting it. Anyone who got the Johnson & Johnson shot can get the booster two months later.<\/p>\n

PSA #2- The sandstorm has passed, but winter has not,<\/strong> Mahmoud Shaheen, a senior official at the Egyptian Meteorological Authority (EMA), told Kelma Akhira\u2019s Lamees El Hadidi (watch, runtime 2:10<\/a>). Don\u2019t put on your summer clothes just yet: colder weather \u2014 by our Egyptian standards \u2014 is expected to last until March 21st, said Shaheen. We will see daytime highs of 21-22\u00b0C in the capital city and overnight lows of around 10-12\u00b0C through Thursday, according to the EMA (pdf).<\/a> Our favourite weather app thinks it will be a bit warmer than that, but it\u2019s a close call.<\/p>\n

LATER THIS MONTH-<\/strong><\/p>\n

The Egyptian Electricity Transmission Company will this month sign a power <\/strong>purchase agreement for <\/strong>1.1 GW<\/strong> of wind projects <\/strong>with Saudi renewables company ACWA Power, Al Borsa<\/a> reported yesterday, citing sources it claims have knowledge of the matter. The plants will cost more than USD 1.2 bn to implement, the sources claimed.<\/p>\n

\n
\n
\n
\n

\n Get Enterprise<\/b> daily
\n <\/h4>\n<\/p><\/div>\n

The roundup of news and trends that move your markets and shape corporate agendas delivered straight to your inbox.<\/p>\n

Subscribe here<\/a>\n <\/div>\n<\/p><\/div>\n<\/div>\n

ANALYST NOTE OF THE WEEK- <\/strong>Check out this doozy<\/a>, courtesy of BCA Research, which should raise a smirk even as it casually assigns a 10% chance of nuclear war. \u201cIf an ICBM is heading your way, the size and composition of your portfolio becomes irrelevant \u2026 The risk of Armageddon has risen dramatically. Stay bullish on stocks over a 12-month horizon.\u201d<\/p>\n

CIRCLE YOUR CALENDAR-<\/strong><\/p>\n

US Deputy Secretary of State Wendy Sherman will be in town this Thursday and Friday<\/strong>, the State Department said in a statement<\/a> on Thursday. Sherman will meet with Foreign Minister Sameh Shoukry and \u201cother senior officials,\u201d including National Council for Human Rights chief Moushira Khattab.<\/p>\n

Contemporary art and culture center <\/strong>Darb1718<\/a><\/strong> is hosting its <\/strong>3031 Art Festival<\/a><\/strong> until next Saturday, 12 March on its premises in Fustat, Old Cairo. Unique collections of multidisciplinary art will be on display along with live music, dance, theater performances, and interactive workshops. Guest speakers Adsum Art Consultancy<\/a> will be on hand to discuss investing in art. Catch a full day of activities from 1pm\u20139:30pm on weekends and weekdays from 4pm\u20131pm.<\/p>\n

Other news triggers to keep your eye on<\/strong> over the next few weeks:<\/p>\n