Page 6 - EurOil Week 50 2021

EurOil COMMENTARY EurOil

the initial sanctions in response to any further eager to impose weighty sanctions on Moscow,
aggressive moves in Ukraine will be extremely its European allies may be more reluctant given
significant and isolating for Russia and for Rus- the state of the European gas market. Moscow
sian business and for the Russian people,” she could easily retaliate against any measures
said. imposed by its European customers by cut-
However, Biden appeared to retreat on what ting gas supplies, and even a relatively small
his administration was prepared to do in later decrease would have major ramifications for
comments, stating that “the idea that the US is prices.
going to unilaterally use force to confront Rus- Politics aside, though, there are justifiable
sia invading Ukraine is not on the cards right concerns of significant problems occurring with
now.” Yet some observers noted that the use of European gas supply this winter. Asia continues
the word “unilaterally” left the door open for the to swallow up the bulk of global LNG supply,
US to join other nations, perhaps Ukraine’s allies leaving little spare for European markets. And
in Eastern Europe such as Poland and the Baltic while Russia has been accused of keeping some
States, in confronting Russia militarily. supply back from the market to drive up prices,
evidence is mounting that Gazprom simply does
What next? not have the capacity to meet rising demand. It
Russia and the Putin leadership would have looks increasingly likely that domestic rival
little to gain from an offensive in Ukraine that Rosneft will soon get access to the European gas
would surely result in the country facing unprec- market, ending Gazprom’s monopoly. It is hard
edented economic isolation at a time when it is to imagine the Kremlin ever letting this happen
struggling to revive its economy in the wake of unless Gazprom really was unable to meet soar-
the coronavirus (COVID-19) pandemic. The ing demand in Europe on its own.
Russian electorate are also far more weary of Meanwhile, Europe has an alarmingly low
foreign interventions than they were at the time level of gas in storage for this time of year. Stor-
of Crimea’s annexation. They are far more con- age facilities in the EU and the UK were just
cerned with stagnating living standards in Rus- 62.8% full as of December 13, according to data
sia, which would surely be affected in the event published by Gas Infrastructure Europe, even
of further international sanctions. though there are several months of the winter
At the same time, while the US would be heating season left to come. ™

P6 www. NEWSBASE .com Week 50 16•December•2021