China’s Return, Price Ceiling Are Two Challenges to Global Energy Market Balance

In the frame, Cornelia Meyer, macro-economist and energy expert. A refueling station in the Chinese city of Chongqing. (Reuters)
In the frame, Cornelia Meyer, macro-economist and energy expert. A refueling station in the Chinese city of Chongqing. (Reuters)
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China’s Return, Price Ceiling Are Two Challenges to Global Energy Market Balance

In the frame, Cornelia Meyer, macro-economist and energy expert. A refueling station in the Chinese city of Chongqing. (Reuters)
In the frame, Cornelia Meyer, macro-economist and energy expert. A refueling station in the Chinese city of Chongqing. (Reuters)

Cornelia Meyer, macro-economist and energy expert, said the reopening of China following the zero-Covid-19 policy and the price ceilings imposed on the purchase of energy products from Russia will pose challenges to the balance of the global energy market.

She also expected the demand for gas to grow one percent this year, while the supply to increase to less than one percent.

In an interview with Asharq Al-Awsat, Meyer said the shrinking demand for gas in Europe was a result of the war in Ukraine, as European countries sought to curb their reliance on Russian gas.

This will inevitably increase the demand for the liquefied natural gas (LNG), which will lead to a rise in the cost of LNG shipments and an increase in gas prices in Europe and around the world, according to the expert.

Nonetheless, Meyer emphasized that with the growth of Chinese demand, energy markets will become more stable.

“With China emerging from the zero Covid-19 policy, the demand for LNG will increase, making it difficult for Europe to control the shipped supplies,” she said.

Meyer noted that the current situation was due to the fact that the gas price ceiling set by the European Union to punish Russia could be counterproductive in attracting the required quantities of gas, as there are fewer buyers, which gives them great bargaining power.

According to Meyer, this comes at a time when the demand for oil has exceeded pre-pandemic levels that topped 102 million barrels per day, while the market is still tight, with OPEC’s surplus production capacity at about two barrels per day.

Growth and production of LNG supplies would remain limited until 2025 amid a very long business cycle, she noted.

The Ukrainian war, according to the expert, led to a decrease in Russian gas consumption and production and a redirection of Russian crude oil trade routes away from Europe to Asia, specifically through China, India and Türkiye, where Russian crude is bought at a huge discount.

Regarding the energy markets, Meyer said she believed that the lack of investment was the main challenge in the hydrocarbon sector.

“Saudi Arabia and the UAE invested reliably, while international oil companies were reluctant to do so due to profitability concerns, amid the Covid-19 pandemic and environmental legislation,” she remarked, adding: “Saudi Arabia is not a player in the global gas and LNG markets, but it is set to become a major player in hydrogen in the future.”



Gold Gains on Safe-haven Demand as Trump Expands Trade War

FILE PHOTO: An employee places ingots of 99.99 percent pure gold in a workroom at the Novosibirsk precious metals refining and manufacturing plant in the Siberian city of Novosibirsk, Russia, September 15, 2023. REUTERS/Alexander Manzyuk/File Photo
FILE PHOTO: An employee places ingots of 99.99 percent pure gold in a workroom at the Novosibirsk precious metals refining and manufacturing plant in the Siberian city of Novosibirsk, Russia, September 15, 2023. REUTERS/Alexander Manzyuk/File Photo
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Gold Gains on Safe-haven Demand as Trump Expands Trade War

FILE PHOTO: An employee places ingots of 99.99 percent pure gold in a workroom at the Novosibirsk precious metals refining and manufacturing plant in the Siberian city of Novosibirsk, Russia, September 15, 2023. REUTERS/Alexander Manzyuk/File Photo
FILE PHOTO: An employee places ingots of 99.99 percent pure gold in a workroom at the Novosibirsk precious metals refining and manufacturing plant in the Siberian city of Novosibirsk, Russia, September 15, 2023. REUTERS/Alexander Manzyuk/File Photo

Gold prices rose for a third straight session on Friday, as US President Donald Trump's announcement of new tariffs on Canada and broader tariff threats against other trading partners lifted demand for the safe-haven asset.
Spot gold was up 0.5% to $3,339.99 per ounce, as of 0755 GMT. US gold futures gained 0.8% to $3,351.
"We're seeing some growing demand for gold as a haven. There are investors looking for some safety asset despite stock markets hitting highs. And any dip in gold is seen as a buying opportunity now," said Carlo Alberto De Casa, an external analyst at Swissquote.
On Thursday, Trump said US would impose a 35% tariff on imports from Canada and planned to impose blanket duties of 15% or 20% on most other trade partners, Reuters said.
This follows Wednesday's announcement of a 50% tariff on US copper imports and a similar levy on goods from Brazil, along with tariff notifications sent earlier to other trading partners.
Trump also said the European Union could receive a letter on tariff rates by Friday, throwing into question the progress of trade talks between Washington and the 27-nation bloc.
"Rising trade tensions have reinvigorated demand for haven assets such as gold amid the prospect of an economic slowdown. The more dovish Fed is also boosting investor appetite," analysts at ANZ wrote in a note.
Data on Thursday showed weekly jobless claims in the US fell unexpectedly to a seven-week low, indicating stable employment levels.
Federal Reserve Governor Christopher Waller on Thursday reiterated his belief the central bank could cut interest rates at its policy meeting later this month.
Meanwhile, Fed Bank of San Francisco President Mary Daly said two rate cuts remain on the table for this year.
Lower rates boost non-yielding gold's appeal.
Elsewhere, spot silver rose 0.9% to $37.37 per ounce, platinum fell 1% to $1,346.81 and palladium climbed 1.3% to $1,156.44.