WTI soared $10 in a single day! Is $170 really far away?

March 1, what a big day, look at international energy prices, international crude oil +10%, international thermal coal +15%, European natural gas +20%.

Chart: Brent price

In terms of crude oil, although the International Energy Agency said that it will release 60 million barrels, although Iran's nuclear deal can also bring 70 million barrels of floating storage, but human daily crude oil consumption demand is more than 100 million barrels, so Morgan Stanley proposed to add a geopolitical risk premium of $10 to the current oil price
.

In terms of international thermal coal, thermal coal prices broke record highs for 2 consecutive days as Russian thermal coal supplies will not increase significantly in 2022, and Russian coal exports have already begun to decrease due to logistics risks, and Germany announced plans to build coal stocks last weekend
.

Chart: European thermal coal prices

In terms of European gas, Germany has announced plans to build gas reserves, and other countries on the continent will certainly follow suit, and Russian gas is hit by geopolitical risks, with European gas prices rising 20%
on Tuesday.

Chart: Natural Gas Prices in Europe

At present, the most tense situation in the international market is still the situation
in Russia and Ukraine.
Russia's attack on Ukraine has inspired the ideals of freedom for the people of the world, but humanity is also paying the price for freedom, and the serious problems are as follows:

In terms of natural gas, Russia supplies 41% of European crude oil imports, the Balkan countries almost exclusively supply Russian energy, and Germany and Italy rely on Russia for half of their natural gas
.
The European grid is about one-third dependent on natural gas, countries such as the Netherlands, Ireland, Italy, Poland and other countries rely on natural gas for half of their electricity, Germany is shutting down nuclear power plants, and Germany's dependence on fossil fuels for electricity is actually rising
.
The natural gas reserves in Europe and the United States are lower than in previous years, and only a quarter of Europe's natural gas imports are liquefied natural gas, and the rest of the natural gas is pipeline natural gas imports, so once there is a disruption of Russia's pipeline gas supply to Europe, LNG supplies from countries such as the United States and Qatar alone cannot fill the demand gap
in Europe.

In terms of crude oil, the latest data of Russia's crude oil daily production is 11.
2 million barrels / day, Russia's crude oil production accounts for 11% of the world's crude oil production, Russia's crude oil supplies account for 27% of Europe's total crude oil imports, and in 2020, due to the new crown epidemic and lockdown policies, the global crude oil production will eventually be reduced by 6.
5 million barrels / day, that is, if the next economic sanctions blockade against Russia causes the number of Russian crude oil exports to be halved, Then the impact of these sanctions on global crude oil supply will be equivalent to the scale of crude oil production cuts brought about during the new crown epidemic, but now that human demand has returned to the pre-pandemic outbreak, the oil price of $170 does not seem out of reach! Why $170 and not $150? Because the dollar today is not the dollar
it was in 2008.

Chart: Russian crude oil production

Furthermore, if Russia has to shut down oil and gas wells to solve the storage problem because of long-term sanctions that cannot smoothly export crude oil and natural gas, then humanity, mainly Europeans and Asians, will further face the risk of a decline in the reliable supply of fossil fuels, when Europeans and Asians can only expect the spare capacity of American shale oil and OPEC Middle Eastern oil producers is very reliable, and the reality we face now is, so far.
Production capacity in the US and OPEC is still not back to pre-pandemic levels!

All in all, after a decade of declining investment in fossil fuels, humanity is finally beginning to face the reality that it is difficult to find a reliable supply of energy in the short term, traders are difficult to determine at what price level human energy demand will begin to decline, large energy traders are difficult to determine the historical high price of energy and any impact of government policy measures on market demand, the consciousness of social progress of all mankind is awakening, and all mankind is fighting for freedom and green.
All of humanity is paying a greater price
for this.

At the very least, we should pray for world peace first!