Europe’s vulnerability to loss of Russian energy supplies helps explain relative caution on sanctions

One of the ironies of the war in Ukraine is that the Kremlin’s finances benefit every time the crisis deepens. After Saudi Arabia, Russia is the second biggest exporter of crude oil, and it is out on its own as an exporter of natural gas.

Countries producing more oil and gas than they consume enjoy windfall gains when prices rise – and Russia falls into that category.

Conversely, countries not self-sufficient in energy suffer when prices are high because costs for business rise and consumer spending power is squeezed. There is a lively debate about whether the US is self-sufficient in energy, but it is certainly a lot less dependent on imports than the European Union, which gets 40% of its natural gas from Russia.

Europe is a lot more vulnerable to a loss of Russian energy supplies than the US, and that helps explain why the German chancellor, Olaf Scholz, is more cautious than Washington over extending the west’s sanctions regime to oil and gas – at least for now.

After Antony Blinken, Joe Biden’s secretary of state, sent prices rocketing by saying the US and its allies were actively considering adding oil and gas to the sanctions list, Scholz said Russian energy was “essential” to Europeans’ daily lives.

Boris Johnson also expressed caution, making it clear that a ratcheting-up of sanctions to include oil and gas could not happen overnight. The prime minister’s warning came as the cost of unleaded petrol on UK forecourts hit 155p a litre, according to the RAC.

The International Monetary Fund is concerned about the impact of energy prices on a global economy still recovering from the Covid-19 pandemic, with the fear that the hit to demand in energy-consuming countries will not be offset by a increase in spending by energy producers. The economic consequences are already “very serious”, it says.

At the start of 2022, the EU was paying €190m a day for the natural gas it received from Russia, but by the end of last week this daily figure had risen to €610m. The further increase in gas prices since means the bill will now be even higher.

It is a similar story for oil, where in early trading the cost of a barrel of Brent crude briefly reached $139 – within striking distance of its record high of $147 a barrel in 2008. On some estimates, Europe is paying $285m a day for Russian oil.

Nick Parsons, head of research for the renewable energy company Thomas Lloyd, said that in sterling terms, oil prices (unadjusted for inflation) were higher now than 14 years ago, owing to a lower exchange rate. In 2008, with the pound worth $2, a barrel of oil cost £73; at the current exchange rate of $1.31, it costs £106 a barrel.

It remains to be seen whether Russia is actually reaping the full benefit of rising prices. Neil Shearing, group chief economist at Capital Economics, says sanctions are already having a marked impact on cross-border transactions, including as yet untouched oil and gas exports.

Evidence for that, Shearing says, comes from the price differential between Brent crude – one of the global benchmarks – and Urals crude, the main Russian export blend. Before the invasion, Urals crude traded at an average discount of $2-$3 a barrel, but that has subsequently widened to almost $25 a barrel.

With the rouble hitting fresh lows against the US dollar, Russia is already feeling the impact of sanctions. But so too – in the economic version of mutually assured destruction – is the west.

Guardian

4 French companies already cut off staff and stop production as most of the materials are from Russia
Germany government have already kicked against sanction on Russia oil because German companies need Cheap Russia gas.
Wheat already hit all time high


USA want to use Venezuela and Iran against Russia but Venezuela want USA and UK to return all their money and gold first
Things are going crazy now

More reason why russia will want to prolong the war, just wonder why keiv is yet to be capture

ray501:
More reason why russia will want to prolong the war, just wonder why keiv is yet to be capture

Unless Russia carpet bomb Kyiv just like they did in Chechen region, Syria and Georgia.
But I think Russia also underrated Kyiv but Russia troops around Kyiv made it hard for Ukraine to send troops to East and South Front.
Ukraine is now landlocked and Russia will link Main Russia to Russia troops in Moldova

Na them sabi. If only Russia can just stop gas supply to EU for just one week, make their people die small. Then resume supply to them. This is just to teach them a brief lesson.

Oghene1st:
Na them sabi. If only Russia can just stop gas supply to EU for just one week, make their people die small. Then resume supply to them. This is just to teach them a brief lesson.

Lol something they won't try, gas is their only lifeline now, their economy is in coma

USA would begin supplies from their reserves.

I see Nigeria government and oil companies smiling to the bank soon. They only cry wolves when the price per barrel drops to its lowest ebb. Yeye govt

That's war for you. I just pray this will come to an end soon.

It goes both ways. Two words: Collateral Damage!

We living in perilous times

Eriokanmi:
USA can begin using their reserves.

Which reserves? Oh! Now, I remember. The ones they stole from Iraq, Libya & Syria under the guise of spreading “Freedom & Democracy”.

Attached are pictures of the Gold Bars stolen by the “United Snakes of Amerikastan” from Iraqi’s vault while their satanic campaign of “Freedom & Democracy” was ongoing during the invasion of Iraq.

All those buharideen thinking that the sanctions will hurt russia little did they know that it goes both way.

Horbar1:
That's war for you. I just pray this will come to an end soon.

Amen. People lose and win during war. Nigerian govt will gain heavily from this development via the sale of crude I hope the common man would feel the breeze.

AMERICANS DONT KNOW THAT IF RUSSIA IS NUKED TODAY, THE HIDDEN MACHINES WILL AUTOMATICALLY TAKE OVER, THIS WILL BE THE END OF THE WORLD. THEY SHOULD BE CAREFUL WITH RUSSIA. THEY DONT KNOW MUCH ABOUT RUSSIA CAPABILITIES. THEY HAVE MORE THAN WHAT THE EYES CAN SEE

Nairaland CNN war analysts ngwanuni oo

Come tell us all the trouble that Russia landed themselves in oo

Lies

Eastern propaganda from Putin.
The West is rich enough to afford expensive gas, i pity the poor Russians whose economy is crippling.

MangekyoAlt:

Europe’s vulnerability to loss of Russian energy supplies helps explain relative caution on sanctions



Guardian

The Question Is: Can Queen Elizabeth and Other Private Families In The Circle Of Committee Of 300 who own NATO, USA and Europe do withouth Oil Business??

Bunch of Murderous Occultic one world government shapers.

Putin, Give them no gas anymore, Let them Freeze!!!!

Do not be ignorant. US oil reserves has been building over the years. US government do not set price of gas. It's simply supply and demand interaction and the govt has zero input in the price of gas.

Zoharariel:


Which reserves? Oh! Now, I remember. The ones they stole from Iraq, Libya & Syria under the guise of spreading “Freedom & Democrac”.

Biden is going to Saudi Arabia already. The market will be flooded anytime soon.

Talks ongoing with Iran also.

Y`all should stop making it look like other countries don't have what Russia has.

Venezuelan oil is coming in, US are on it

Faber:
Venezuelan oil is coming in, US are on it

You are current!

This war get as e bi o

CoronaVirusPro:


You are current!

It takes a current person to sight a current guy. You too, you're current my guy

Oghene1st:
Na them sabi. If only Russia can just stop gas supply to EU for just one week, make their people die small. Then resume supply to them. This is just to teach them a brief lesson.

Enough of this rubbish talks of people dying of Russia shuts off gas supply? Before Russian gas how many people died??

Oghene1st:
Na them sabi. If only Russia can just stop gas supply to EU for just one week, make their people die small. Then resume supply to them. This is just to teach them a brief lesson.

Enough of this rubbish talks of people dying of Russia shuts off gas supply? Before Russian gas how many people died?? And moreover Russia needs to sell gas now because that’s the only way they can save their economy at least, so they ain’t shutting anything down. Make una dey use sense dey comment

The worst thing about all this is: the Nigerian government isn't cashing in on the high oil prices.

The West will certainly do, but trust me, Russians will feel it harder

phenase:
AMERICANS DONT KNOW THAT IF RUSSIA IS NUKED TODAY, THE HIDDEN MACHINES WILL AUTOMATICALLY TAKE OVER, THIS WILL BE THE END OF THE WORLD. THEY SHOULD BE CAREFUL WITH RUSSIA. THEY DONT KNOW MUCH ABOUT RUSSIA CAPABILITIES. THEY HAVE MORE THAN WHAT THE EYES CAN SEE

STFU!!

goodheart01:


Enough of this rubbish talks of people dying of Russia shuts off gas supply? Before Russian gas how many people died?? And moreover Russia needs to sell gas now because that’s the only way they can save their economy at least, so they ain’t shutting anything down. Make una dey use sense dey comment

Most of those guys are villagers. Schooling them will take years