Geopolitical division — given Russia’s invasion of Ukraine and rising tensions in the South China Sea — continue to fuel demand/supply imbalances; as such, price volatility and shocks to global commerce could remain in 2023, cautions Omar Ayales, editor of Gold Charts R Us.
The invasion has pushed Europeans and allies to take a strong stance against Russia, including a boycott to Russian energy. The imbalances are likely to continue fueling energy and resources overall higher. It could become the catalyst to the ongoing commodity super cycle.
Moreover, consider current prices in energy have been with weak demand from emerging markets, particularly China that is only now providing guidelines to re-open its economy after a stern Zero Covid policy.
In addition the Biden administration is also talking about filling up strategic oil reserves and OPEC+ plus has a supply cut in place. As these situations develop, particularly the re-opening of the Chinese economy, we could see a supply-demand crunch that could send energy prices soaring in 2023.
But it’s not only crude oil; it’s energy across the board — including natural gas — as international organizations continue to push towards cleaner sources of energy and the world seemingly breaks into economic and political blocs.
The push for green energy can gain momentum as western allies look to reduce reliance on foreign energy providers that are not politically aligned, most of which are producers of oil and other fossil fuels.
For growth-oriented stocks I recommend Artero Resources (AR), a fast growing natural gas provider operating in the Appalachian Basin.
Energy sources like natural gas are likely to become more popular within western countries as new technology is allowing global authorities to rebranded them into environmentally safe energy sources that can help achieve a green economy that is less reliant on fossil fuels.
The U.S. will continue being a strong provider of liquified natural gas to Europe, particularly as sanctions and a cold war against Russia and another against China remains. A strong relationship with Europe could help the U.S. sells lots of gas which will benefit local producers.
Given the stronger dollar and global uncertainty regarding geo-political events, it is important to stay with companies that operate in jurisdictions you feel better in. I tend to like North American jurisdictions. They imply a higher cost, but reduces political risk dramatically.