Europe: Winter of Energy Discontent

Price caps on Russian crude exports engineered by Yellen go into effect, but will make no difference to Russian revenues which are already based on steep discounting. Europe has been importing more LNG from Russia to make up for drops in piped volumes, but that remains a revenue hit for Russia, and a self-imposed one. The potentially momentous December OPEC meeting has now come and gone, and the cartel is staying pat on reduced production. Production growth forecasts for the US have been marked down, leaving Europe no sources of relief when bans on imports from Russia kick in. It all adds up to a tight oil market in which global benchmarks should rally back toward $100.