May 4, 2022
The following reports do sound like “someone really likes trouble!” Ukraine war and ensued sanctions against Russia plus sanctions against sanctions have created many uncertainties around the world. Fact of life is that EU depends on Russian oil and gas right now for keeping her economy going. If Ukraine war does not end soon, EU is into big trouble: BIG troubles. Economy will contract for sure; inflation will keep rising! Six moths away, if the war is still raging, many Europeans will have to enjoy a very cold winter. Of course, sufferings will not be limited to Europeans, no one could be spared. Many around the world even will experience starvations, pandemics. It will be miserable.
- “[R]isk aggravating their plight with the decision to shut themselves off from Russian oil imports. But an oil ban leaves the world with less supply as the U.S. and Europe face the fastest inflation in decades alongside wilting confidence because of the war in Ukraine.”
- “And while lockdowns in China could make it easier to find alternatives to Russia for oil — that could change if the Asian country’s economy picks up again.” “[C]autioning that uncertainties over energy supplies remain.”
- Berenberg economist Holger Schmieding says Europe could phase out Russian oil by year-end without causing shortages and dramatic price increases. What is the reason not “phasing out” Russian oil right now? Putin has issued a decree that in nine days, Russia will initiate embargos against unfriendly trading partners. When Putin cuts off oil and gas right now, does EU have a plan B?
- “Poland has found a way of getting its hands on Russian gas. The Eastern European nation is now receiving Russian fuel from its allies. The gas is being ordered by buyers in Italy and France, and supplied through pipelines crossing Poland, he said.” Gas price has already skyrocketed, who will pay? Polish people! There is no doubt that gas is from Russia! But for how long?
Russian Oil Embargo Risks More Inflation Trouble for Europe
Wed, May 4, 2022, 5:29 AM
While European Commission President Ursula von der Leyen promises the planned embargo will be implemented “in a way that allows us and our partners to secure alternative supply routes,” German Economy Minister Robert Habeck has warned the region’s top economy will suffer, citing possible shortages and further upward pressure on prices.
The step is seen as more manageable than disrupting flows of Russian natural gas. But an oil ban leaves the world with less supply as the U.S. and Europe face the fastest inflation in decades alongside wilting confidence because of the war in Ukraine.
“Russian oil can be replaced on the world market in the short term, but with additional costs and logistical challenges,” German industry trade group BDI said Wednesday. “Given the oil embargo, energy prices will probably to continue to rise.”
The EU has long agonized over whether it can withstand being cut off from a top energy supplier, having received more than a quarter of its oil imports from Russia last year.
What Bloomberg Economics says…
“The EU’s proposal to ban imports of Russian oil has done little harm to the global price of crude, indicating the region can manage the economic impact. The global nature of the oil market and the gradual phase-in of the proposed embargo make it a less severe threat to the bloc than a ban on natural gas from Russia.”
–Ana Luis Andrade, economist.
The short-term impact of the EU’s proposal should be limited because the timetable is in line with existing plans by governments to wean themselves off Russian oil, according to Klaus-Juergen Gern, an economist at the Kiel Institute for the World Economy.
Even so, markets for refined products like diesel, where Russia is an important supplier, may “become tight, and prices could increase further,” Gern said by phone. And while lockdowns in China could make it easier to find alternatives to Russia for oil — that could change if the Asian country’s economy picks up again.
The most extreme step would be a ban on Russian natural gas, which mostly flows through pipelines and is harder to replace than oil because sea deliveries from other suppliers couldn’t cover the shortfall.
The IMF reckons EU output in 2023 would be about 3% lower without Russian oil and gas imports.
For Germany, the Bundesbank says activity is at risk of shrinking nearly 2% in 2022 if an energy embargo leads to restrictions on power providers and industry. Some analysts have argued that the impact would be less severe, and that the economy would be able to handle the shock.
Berenberg economist Holger Schmieding says Europe could phase out Russian oil by year-end without causing shortages and dramatic price increases.
UBS Global Wealth Management said that while the impact of the embargo on Europe’s economic growth is likely to be “manageable,” uncertainty over supplies will probably “keep energy prices supported.”
Moscow stopped sending gas to Poland, but Italy and France are plugging the gap with rerouted Russian supplies, says Gazprom
Wed, May 4, 2022, 10:37 AM
- Despite Russia halting natural gas deliveries last week, Poland is still getting supplies.
- A Gazprom spokesperson said buyers in Italy and France are ordering Russian gas and sending it to Poland.
- Gazprom has warned previously that it would retaliate against nations that supplied its gas to Poland.
Poland is still receiving Russian gas despite being cut off last week by Moscow for failing to meet its demand that payments be made in rubles.
That’s because Italy and France have stepped in to supply Poland, according to Russian energy giant Gazprom. Spokesman Sergei Kupriyanov told Bloomberg that buyers in Italy and France are ordering Russian gas and passing it on via pipelines in Poland.
Russian gas is making its way to Poland via so-called virtual reverse flows, Kupriyanov said, referring to the practice of grid operators reversing the direction of gas in a pipeline.
But Gazprom has warned previously that it would retaliate against nations that supply its gas to Poland, Bloomberg reported, though it remains unclear what that response will look like.
Last week, Moscow cut off Poland and Bulgaria from its natural gas, saying both countries failed to pay for supplies using rubles. European gas prices skyrocketed amid concerns that the Kremlin could similarly target other nations.
Since then energy prices have continued to surge in Europe and spiked Wednesday after the European Union proposed a total ban on Russian oil imports early that it would be phased in over six months.
Cut Off by Moscow, Poland Gets Russian Gas From Its Allies
Wed, May 4, 2022, 8:04 AM
The Eastern European nation is now receiving Russian fuel from its allies, according to Sergei Kupriyanov, a spokesman for Gazprom PJSC. The gas is being ordered by buyers in Italy and France, and supplied through pipelines crossing Poland, he said.
Russia cut gas supplies to Poland last week after Warsaw refused to comply with its demands that gas should now be paid for in rubles. While the EU has said submitting to Moscow’s new terms would be a breach of sanctions, other European countries are still looking for possible workarounds as their payment deadlines are yet to fall due.
Gazprom had previously warned that it would reduce transit to countries supplying its gas to Poland, should the Eastern European nation siphon off supplies. It’s unclear if and how Gazprom will now respond.