- Russia’s shocking invasion of Ukraine a year ago has fueled fears of an energy crisis in Europe.
- Western powers have responded by introducing sanctions aimed at reducing the Kremlin’s oil and gas revenues.
- These four graphs show how war has changed global energy markets over the past year.
Exactly one year ago, Russian tanks invaded Ukraine, beginning a war that shocked the world and sparked a chain of events that transformed global energy markets.
In a tumultuous 12 months for oil and gas markets, prices first surged as Europe faced the threat of a full-blown energy crisis and Russia threatened to cut supplies, but then the continent Prices fell as the company made notable progress in making replacement arrangements.
A series of Western economic sanctions against Russia, following its invasion of Ukraine, are aimed at thwarting Russian energy exports, making it difficult for Russia, the world’s second-largest producer of oil and gas, to transport cargo. It has brought about a dramatic change in method and place.
Supplies to Europe, traditionally Russia’s biggest buyer of energy, are falling off a cliff, with Asian countries such as China and India snapping record amounts at discounted prices.
Here are four charts that capture the most notable changes that have taken hold in the oil and gas market over the past year.
Russian oil prices crash
On December 5th, a group of G7 countries capped Russia’s offshore oil price at $60. This is to cut Moscow’s energy revenues that can be used to fund Putin’s war. The European Union he implemented the same ban on February 5th.
benchmark russian Ural crude oil Prices have fallen significantly over the past year, going from $95 a barrel on the day of the invasion to below $60 at the final check.
“The price cap was put in place to allow Russian oil to continue to flow into the market, but at the same time it reduced Russian revenues,” said IEA strategist Trill Bossoni. CNBC last week.
“We see a real decline in the revenue Russia is getting from its oil and gas, even though Russian production is starting to hit the market.”
Russia found another oil buyer
But Russia has still managed to find other buyers for the oil. Ural crude is currently trading at a discount of $20 a barrel to the West Texas Intermediate benchmark. Also, non-EU countries such as China and India, as well as non-G7 countries, seized the opportunity to get the cheapest possible fuel.
China will finally reopen its economy in late 2022 after nearly two years of a stringent zero-COVID lockdown. That means we need more oil. The commodities firm is currently buying a record 1.7 million barrels of Ural crude oil per day, according to his Kpler data.
India has also been aggressively increasing its purchases of Russian crude, currently importing 1.2 million barrels daily, according to Vortexa.
The trend is expected to continue as some countries distance themselves from Russian oil and others take advantage of significantly reduced prices.
“The trends seen in Asia in 2022 are likely to continue this year, with China and India importing large amounts of crude oil from Russia,” said Lim Jit Yang, an adviser to Asia-Pacific oil markets. rice field S&P Global Commodities Insights.
Europe is now less dependent on Russian gas
Russia has repeatedly weaponized the flow of natural gas in response to Western sanctions and completely cut off flow through the Nord Stream 1 pipeline to crate the European economy.
However, countries on the continent responded by finding other sources of gas.
Bringing in frozen liquefied natural gas was key to their approach.Germany and Greece are building multiple large floating terminals that will allow Europe to bring in gas from countries such as Australia, Qatar and the United States. By doing so, we are taking the initiative.
European Commission President Ursula von der Leyen said earlier this month that “Russia threatened us by threatening to cut energy supplies.”
“We have completely removed Russia’s dependence on fossil fuels. It has gone much faster than we expected,” she said.
Natural gas prices soared, then fell again
Immediately after the invasion, economists panicked that Russia could trigger a full-blown energy crisis in Europe.
Dutch TTF futures surged by nearly 240% between February and August last year before returning to pre-war levels thanks to policies introduced by the European Union.
Besides bringing in more gas from other sources, the EU has asked member states to meet their winter gas storage targets months ahead of schedule. likewise.
“The natural gas market is becoming more global as demand for liquefied natural gas continues to grow,” said Ole Hansen, Head of Commodity Strategy at Saxo Bank.
“With LNG shipments likely to become more competitive next winter, China’s resilience is the biggest upside risk to prices and looks manageable,” he added.