Energy prices skyrocket after Russia attacks Ukraine
Image credit: RT (stillshot)
Gas and oil prices in Europe skyrocketed after Russia attacked Ukraine early Thursday morning, February 24, 2022. Meanwhile, stock markets around the world tumbled amid rising concerns while Euro plunged to its lowest level against the dollar since June 2020 and hit a nearly 7-year low against the Swiss franc. Europe relies on Russia for nearly 40% of its natural gas and 25% of its oil.
Fears that a war could disrupt global energy supplies sent Brent crude jumping as much as 9% to $105.79 a barrel as futures linked to TTF, Europe’s wholesale gas price, surged 60% to €141 per megawatt-hour.1
The extent of the Russian military operation ordered by President Vladimir Putin appeared to surprise some market participants, and could explain the powerful jump in prices, said Richard Bronze, head of geopolitics at Energy Aspects.2
"There was a mistaken view in the market as recently as yesterday that either Putin had gotten enough to pause or that things would be limited to the Donbas," he said.
"Oil and natural gas prices have become the crisis’ fear barometer," said Norbert Rücker of Julius Baer. "Any disruption of flows between Russia and Europe, due to damage or sanctions, would drastically add to the already present supply scarcity."
The crisis in Ukraine means that new gas contracts with Russia are inconceivable, the chair of Germany’s foreign affairs committee said Thursday.3
Earlier this week, Germany suspended the certification of the Nord Stream 2 pipeline, putting the energy project with Russia on hold indefinitely. NS2 is aimed at increasing Russia’s capacity to deliver gas to Germany and other EU countries via the Baltic Sea, bypassing transit countries such as Ukraine.
"It’s all about duration now — how long does geopolitics remain so unsettled that oil and other commodities stay very high? The longer that occurs, the more it will stoke inflation and the more of a headwind it will put on economic growth in the coming months and quarters," said Tom Essaye, founder of The Sevens Report.4
"And that sets up a potentially bad scenario where we have the Fed tightening, we have very high commodity prices putting a headwind on growth, and that will lead to an economic slowdown."
If you think it can't get worse, think again.
Vigilant citizens in neighboring countries, Europe, and around the world should have all their open plans finalized now.
References:
1 European gas prices soar and oil hits $105 after Russia attack on Ukraine – Financial Times
2 Oil prices soar and worries mount about future energy supplies – The New York Times
3 New German gas contracts with Russia ‘inconceivable’ – media – RT
4 ‘A Triple Hit to Global Economy’: Wall Street on Ukraine Crisis – Bloomberg
Teo Blašković founded The Watchers in 2011 and edited it until 2026, covering seismic and volcanic activity, extreme weather, space weather and near-Earth objects. Articles on this page are his archive.
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