NATGAS: Ukraine to Take More Gas via Poland Route

SX7E (20th Mar) 250p, bought for 5.25 in 18k.

Market seems to have found their initial range limits linked to the U.S.-Israeli operation to promote regime change (couple with Iranian response), although fresh developments surrounding the matter and U.S. desk reaction will be keenly eyed.

• The bid in energy markets is the obvious standout here, with some wrongfooted by the positive public overtures that followed last week’s U.S.-Iran Geneva meeting, brokered by Oman.
• The moving of diplomatic staff in and around the Middle East ahead of the weekend, coupled with source reports, pointed to deeper issues remaining, with the subsequent killing of the Iranian Supreme Leader and scale of the Iranian response generating meaningful responses through early London trade.
• Fresh extension higher in WTI & Brent would target $78.05 & $84.42 respectively, which are Fibonacci resistance points.
• The USD remains the outperformer in G10 FX, while the SEK & Antipodeans struggle from the risk-off tilt. The usually risk-sensitive CAD & NOK are receiving support from the bid in oil (despite the spurious nature of CAD’s correlation with oil in recent times).
• Equities have found a base (key support in the S&P 500 e-mini at 6,751.00 went untested), with the same holding true for core global FI markets, as markets assess the inflationary shock & growth headwinds stemming from the rally in crude and increased geopolitical tension.
• EGB spreads to Bunds widen, as you would expect in this environment.
• Gold has cleared the Fibonacci retracement points drawn off the late Jan-early Feb sell off, with next resistance located ay the January 30 high ($5,451.0/oz).

Reuters reports comments from a Qatari Foreign Ministry spox talking to CNN. Spox says that a number of intercepted Iranian attacks have specifically targeted civilian infrastructure in Qatar, including its international airport. Says Qatari jets have been able to down Iranian drones and other projectiles. 

• Notably, the spox says Iran "has to pay a price for this blatant attack on our people", and that "an attack like this cannot be left without retaliation." In comparison to other Gulf countries (notably Saudi Arabia) that has historically viewed Iran as a regional competitor, Qatar has had relatively cordial relations with Iran. Indeed, the perceived closeness between Tehran and Doha was a contributor to the diplomatic crisis between Qatar and the Arab League from 2017 to 2021. Moreover, Qatar's apparently balanced stance allowed it to serve as one of the key regional mediators, alongside Egypt, between Israel and Hamas, a proxy in Iran's 'axis of resistance'.
• Iran's wild lashing out against not only Israel or US bases in the region but GCC nations' energy and civilian infrastructure risks a much broader conflagration. It could turn what was a situation of the US and Israel engaged in conflict with Iran, while the GCC remained in a defensive posture, into one where countries such as Qatar, the UAE, Kuwait, Bahrain, and Saudi Arabia offer more active backing to US/Israeli forces, or engage in their own strikes on Iranian targets.
• Spox: "Qatar is not engaging with the Iranian gov't right now." In at least a nod to the prospect of de-escalation, the spox says "In the end, this crisis will be solved at the dialogue table."