Editorial: Grim Contango At The Pariahs' Club Ball
In the Cradle of Democracy, the Hellenic Republic has been granted another reprieve by its international creditors. On June 30th, the "Master Financial Assistance Facility Agreement" – Greece’s ongoing European Central Bank (ECB) bailout fund would expire and the beleaguered nation would have had to pay back €1.6 billion ($1.8 billion). This deadline has been extended by a further two days into July.
As the southern European state creeps ever closer to the so-called "Grexit" - the withdrawal of Greece from the 19 nation Eurozone – markets wobbled and then stabilised on confirmation of the repayment extension. While this may be a brief respite, July 20th is an even more daunting prospect for the fiscally-bereft nation, as a €3.5 billion bond held by the ECB matures and must be paid back in full.
All the while, welling oil gluts from the North American shales to the North Sea are causing a growing contango effect - where spot prices for crude are lower than prices in the future.
Hundreds of millions of barrels of stranded oil awaiting sale is sitting in limbo on the world’s oceans, with some of the world’s biggest very large crude carriers (VLCCs) commanding storage rates of up to $35,000 a day to act as seaborne stockpiles.
Yet amidst the potential of oil production carrying on unchecked and a Greek exit from the common currency sending the world into an economic tailspin, profound trenches are beginning to furrow the geopolitical landscape.
The running standoff between the giants of Europa and the Hellenic Republic has pushed the country into the thrall of a similarly-wounded Russian Federation, whose steely bear hug is infinitely warmer than the cold shoulder of its European compatriots.
A members only Pariahs’ Club is forming in the world, and with it the acquisition of unwarranted influence exists and will persist….
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