TheChek News Flow

How the Iran war will reshape our energy future

Fatih Birol, head of the International Energy Agency, has six predictions

Over the Easter weekend, columnist Ruchir Sharma noted that this oil crisis has hit just as governments are too broke to bail out consumers while Saudi Arabia posted the latest premium it charges for its crude — breaking all records. Of course, some traders suggested Riyadh could have asked for even more, considering the circumstances.

I spoke with Fatih Birol, the 68-year-old Turkish head of the International Energy Agency, which was founded after the 1973 Middle East oil crisis in order to manage future shocks.

In the interview, Birol urged countries not to hoard oil and fuel, since resource nationalism is only likely to make shortages worse.

He also spoke at length about how the twin oil crises of the 1970s had reshaped the world, as countries decided to build huge numbers of nuclear power plants and introduced fuel-efficiency standards for cars. Birol remembered how the UK fast-tracked new licences for the oil and gasfields in the North Sea, allowing the basin to go from “virtually nothing” to 6mn barrels per day of production in just 20 years.

I asked Birol if today’s energy crisis would also change our behaviour, and here were his six predictions:

Countries will pour money into nuclear power again

“There will be the acceleration of nuclear power through small modular reactors. We were expecting SMRs to come to market [in the] mid-2030s. It can be even faster.”

Renewables get another push

“I would like to give you one number in Europe. In the last three years, after Russia’s invasion of Ukraine, annual renewable installation increased by a factor of three.”

Consumers weigh up their next petrol or diesel car

“I expect a big push for electric cars, both for new and second-hand electric cars, including in Asia, which is the main driver of global oil demand growth.” 

Countries think twice about relying on natural gas

“The gas industry presented natural gas as a secure, reliable and affordable fuel. But what happened in 2022, after Russia’s invasion of Ukraine, and what is happening now is likely to cast a long shadow over the outlook for gas, particularly in gas-importing developing countries where the gas industry expected to import even larger volumes of gas. I think the natural gas industry will need to work hard to regain its reputation.”

Trade relationships get re-examined

“The geopolitical risk premium for energy products is going to be higher than before the conflict. Importers will look not just at the product and the price, but also assess carefully who is selling — in terms of energy security. And that can affect what fuels and technologies they prioritise and which exporters they buy them from.”

Coal is the big winner

“The oil shocks in the 1970s set off a wave of investment in coal-fired power generation. In the 10 years after 1973, coal power capacity around the world rose by 50 per cent. This time, we may well see some countries increasing the use of coal again, at least temporarily, especially in emerging economies in Asia but also in Europe and North America.”

Commerzbank Doesn’t See Basis For Deal With UniCredit Following Talks

‘An agreed solution is currently not evident,’ Commerzbank says

Germany’s Commerzbank CBK 0.19%increase; green up pointing triangle said that its interactions with UniCredit UCG 0.35%increase; green up pointing triangle haven’t convinced it to do a deal as they haven’t shown enough value upside potential.

The Italian lender, which is Commerzbank’s largest shareholder, last month ratcheted up pressure by launching a takeover offer to force management to the negotiating table.

Commerzbank on Tuesday reiterated the value-creation potential of its business strategy as a standalone entity and said it would upgrade its financial targets when it publishes its first-quarter results in May.

The banks have met several times to discuss the basis and benefits of a tie-up. “An agreed solution is currently not evident,” Commerzbank said.

Most of the potential outlined by UniCredit isn’t based on a combination and can also be realized by Commerzbank independently, without execution risks linked to doing a deal, the German group added.

UniCredit wasn’t immediately available for comment.

The higher dose was approved by the FDA nearly three weeks ago under an accelerated approval process

Novo Nordisk NOVO.B -0.76%decrease; red down pointing triangle launched its higher-dose Wegovy weight-loss shot in the U.S. after the new treatment gained regulatory approval there last month.

The Danish drugmaker said Tuesday that Wegovy HD is now available nationwide through more than 70,000 pharmacies, its online pharmacy, certain telehealth providers and other outlets.

Wegovy HD is a once-weekly injection that contains 7.2 milligrams of active ingredient semaglutide, offering the highest weight-loss of any Wegovy injection so far, the company said.

In a trial of adults with obesity but without diabetes, patients taking a 7.2 milligram dose of Wegovy over about a year and a half lost 21% of their body weight on average, while around one in three people lost 25% or more of their body weight.

Prior to the launch of Wegovy HD, the highest available injectable dose was 2.4 milligrams of semaglutide, which has shown to help patients lose around 18% of their body weight on average.

The higher dose of Wegovy was approved by the Food and Drug Administration nearly three weeks ago under an accelerated approval process based on the results of the trial.

The approval follows decisions from the European Commission and British regulators earlier this year that allowed a Wegovy dose of up to 7.2 milligrams a week administered as three separate shots of 2.4 milligrams. The decisions mean that adults with obesity in the U.K. and all 27 European Union countries can now take the 2.4 milligram dose of Wegovy for at least four weeks and then move up to 7.2 milligrams if they need greater weight loss.

Novo Nordisk has applied for approval of a 7.2 milligram single-dose pen in the EU and U.K., with a decision expected in the second half of the year.

The rollout of higher-dose Wegovy shots comes as the drugmaker broadens its offering in the booming weight-loss market, having started selling its Wegovy weight-loss pill in the U.S. at the start of the year as it awaits regulatory approval of the pill in the EU and U.K.

Rival Eli Lilly began shipping its own obesity pill in the U.S. on Monday.

The company is laying the groundwork to negotiate a step-by-step plan to wrap up the bankruptcy process.

The corporate jet is out, the “New Saks” is on the way in.

Saks Global filed its plan of reorganization with bankruptcy court on Sunday.

And while many of the details were left blank, pending negotiations with the various stakeholders in the coming weeks, the plan will ultimately lay out just who gets what out of the Chapter 11 process. Former secured lenders are expected to come away with control of the company while unsecured creditors, including vendors, will most likely see very little for the bills that piled up before the Jan. 13 bankruptcy filing.

Saks Global has a separate five-year business plan that has been worked out with lenders, but has not been disclosed. That plan sets the strategy that will guide the retailer once it exits bankruptcy, which is expected this summer.

Bankruptcies can be contentious — and there were some fireworks early on with partner Amazon — but the various parties all seem to be playing nice right now, which should help ease the way forward for the parent to Saks Fifth Avenue, Neiman Marcus and Bergdorf Goodman.

A key benefit of the bankruptcy process is the ability to, with court oversight, get out of tough-to-break contracts, including store leases. The retailer is in the process of closing most of its Saks Off 5th doors as well as 21 department stores, mostly from the Saks Fifth Avenue nameplate.

The company, now led by chief executive officer Geoffroy van Raemdonck, is also becoming a little more grounded — literally.

Saks Global cut a deal to sell its Gulfstream Aerospace model G-IV for $6 million, according to a separate court filing.

A spokesperson for the retailer said: “Saks Global’s leadership has made the decision to sell the company’s legacy plane as it continues prioritizing the disciplined use of capital. This action represents another deliberate step to direct investments toward the areas of the business that will drive meaningful growth for a stronger Saks Global.”

There are, in a sense, two Saks’ that are coming into focus right now.

One is the company that was and is still facing a string of unpaid bills, angry vendors and retail dreams that went unfilled. That business is being dissected by the court, creditors and lawyers and will pay out what it can to make good on its broken promises.

The other is the “New Saks.”

That’s how court filings described the holding company or corporation that could be formed to buy Saks Global’s assets out of bankruptcy.

That still-theoretical company just received approval to access $500 million more in funding upon exiting bankruptcy and plans to carry on with the luxury retail dream.

That version of Saks Global has also worked to rebuild relationships with its key brands and hold on to its best sales people.

According to a declaration last week by chief restructuring officer Mark Weinsten, Saks Global has a workforce of about 16,000 who are needed to keep the business chugging.

“The employees are familiar with the global debtors’ businesses, processes and systems and, in certain instances, possess unique skills and experience or have developed and maintain relationships with key vendors and customers,” Weinsten said

The top sales people, who accounted for “tens of millions of dollars in sales” last year, are particularly important.

Weinsten argued to the court that the company should be allowed to pay its top eight sellers bonuses of approximately $260,000 to acknowledge their “significant contributions.”

He said the “top sellers would not be easily replaced. Recruiting, hiring and training qualified replacements would require significant time and expense, and new hires would lack the established customer relationships and institutional knowledge that make [Saks Global’s] current top sellers so valuable.”

Such bonuses are common as companies move through the bankruptcy process and look to establish themselves anew.

And while the past still has a tight grip on Saks Global, more and more at the company is new.

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Three Ways Trump’s Iran Deadline Could Play Out Tonight

President Trump has said he would bomb much of the civilian infrastructure of Iran on Tuesday night if Tehran doesn’t, among other things, allow the Strait of Hormuz to open. He has set a tight deadline of 8 p.m. Eastern time.

Trump has made numerous threats to Iran since the war began in late February. Sometimes he has followed through, and sometimes he has backed down.

Here are three ways the situation could play out ahead of the deadline, if past is prologue:

No action: This seems like the most unlikely scenario, as Trump has created this pressure point, and if he backs away he could lose leverage with Iran. Trump said Monday he was exploring the “concept” of a plan where the U.S. could charge ships for passage through the Strait of Hormuz, so that’s another door he is opening as part of a possible off-ramp. Looking at the way he has used threats in the past (with tariffs, for example), he rarely creates a deadline and then ignores it. That said, military strikes on the scale that Trump is proposing would be quite an escalation, and it’s unclear if the U.S. military and intelligence community have locked in on a way to make it happen.

“Deal” or “talks”: Trump could announce that negotiators were making progress toward a deal, or that a limited deal had been reached. He therefore could either remove the threat of military action or push it back five or 10 days (it’s this type of “punt” that created the current deadline). There are a number of countries pursuing such an outcome, and Trump suggested on Monday that proposals were being shopped back and forth, which could be a prelude to a deal—though Trump said Tehran’s latest proposal was “not enough.”

Military strikes: Trump told the Journal’s Meridith McGraw on Sunday that Iran tries to “tap along” negotiators, always delaying talks, then never agreeing to anything. If he feels Iran is doing that again, it’s possible he would authorize military strikes shortly after the deadline. He could either go all-in, as he has suggested, or start with a series of escalatory strikes, trying to create more pressure on Iran and force them to the table.