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Market Movers Europe, Mar 8-12: Oil markets react to OPEC+ surprise decision; Nord Stream 2 to speed up

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Watch: Market Movers Europe, Mar 8-12: Oil markets react to OPEC+ surprise decision; Nord Stream 2 to speed up

In this week's highlights: Nord Stream 2 development picks up, polymers hit record high prices, and the EU is set to vote on carbon border adjustment.

OPEC+ cuts, Russia-Middle East ties in focus

Second vessel set to join Nord Stream 2 pipelaying

European Polymer prices hit record highs

EU Parliament to vote on carbon border adjustment

Also on Market Movers this week

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Crude backwardation, US rig count see spikes

View Full Transcript

In this week's highlights: Nord Stream 2 development picks up, polymers hit record high prices, and the EU is set to vote on carbon border adjustment.

But first in oil, the main focus this week will be the impact of the surprise decision by OPEC+ countries to maintain their production cuts at around 8% of the pre-pandemic market for another month through to the end of April, with a slight easing for Russia and Kazakhstan. The news sent prices sky-rocketing last week, putting pressure on countries in Europe looking to fire up their economies post-pandemic. The higher prices may also encourage US shale drillers.

We're expecting a detailed assessment in OPEC's own monthly oil market report, published on Thursday, as well as reaction from Russia's Lukoil which publish annual results on Wednesday and from Chevron in the US, which holds an investor presentation on Tuesday.

In a reflection of Russia's increasingly close ties with the Middle East, Foreign Minister Sergei Lavrov embarks on a tour of Gulf nations on Monday, stopping in the UAE, Saudi Arabia and Qatar. While a visit to Tehran is not on the agenda, we'd expect the unresolved issue of US policy on Iran and sanctions limiting its crude exports to figure in the discussions.

In European gas, the timetable for completion of the controversial Nord Stream 2 pipeline from Russia to Germany has swung back into focus.

Last week, Nord Stream 2's developer said a second Russian pipelaying vessel - the Akademik Cherskiy - is now going to join the operation to lay the pipeline in Danish waters.

That is expected to significantly speed up pipelaying work, which could now be completed this summer.

The US is being urged to drive forward with greater sanctions measures against the project to stop it from being completed, but the window of opportunity is narrowing.

If Nord Stream 2 is completed and becomes operational in 2021, it will mean Russia's Gazprom can scale down the use of gas transit via Ukraine and rely less on its storage position in Europe to meet customer demand.

And that takes us to our social media question for the week: Will Nord Stream 2 be up and running this year? Tweet us your thoughts using the hashtag #PlattsMM.

Following record highs last week in both contract and spot pricing for a broad array of European polymer markets, increases are set to continue throughout March.

A perfect storm of tight global supply following US Gulf production outages in February, significantly increased container freight, and high olefin feedstock costs in the first quarter has set polymer prices skyrocketing. This has challenged the economic viability of some plastic converters, who have already been struggling with a change in demand patterns following pandemic lockdowns.

The record high price impact is expected to trickle down the supply chain into final demand. Consumers could start to see the record highs reflected in rising prices for groceries, appliances, and other consumer goods reliant on plastics.

Meanwhile in the European carbon market, more price volatility could be on the cards this week as the European Parliament is set to vote on a proposed Carbon Border Adjustment Mechanism. The potentially far-reaching proposal could place a charge on the carbon content of goods imported into the EU, shifting the economics of international trade as well as driving climate action outside of the EU's borders.

As you can see in this chart, EU carbon prices hit an all-time high of 40 euros per ton in February. If adopted, the CBAM could also allow EU regulators to halt free allocation of carbon allowances for Europe's emissions-intensive industries such as metals and chemicals producers and refineries, prompting them to become more significant buyers of carbon allowances.

For more on all the issues affecting commodity markets from wherever you are, make sure to check out Platts LIVE at the address displayed on your screen.

Thanks for kicking off your Monday with us and have a great week ahead!