Over the past year, and since invading Ukraine last February, Russian President Vladimir Putin has shown the energy he envisions. Almighty, holding the global economy hostage with his whims. Since last summer, Putin has cut off natural gas supplies to Europe, hope Europeans shiver in the winter, and without heat, turn around Making it politically impossible to continue to support Ukraine.
The threat was powerful: in 2021, what 83 percent Export of Russian gas to Europe. Russia’s total global exports are 7 million barrels per day of oil and his 200 billion cubic meters (bcm) of pipe gas, accounting for about half of federal revenue. More importantly, Russia’s commodity exports have played an important role in his chain of global supply. Europe is dependent on Russia for 46% of its total gas supply, and is equally dependent on other Russian products such as metals and fertilizers.
As we approach the one-year anniversary of Putin’s aggression, it is clear that Russia has lost forever its former economic power in world markets.
Over the past year, and since invading Ukraine last February, Russian President Vladimir Putin has shown the energy he envisions. Almighty, holding the global economy hostage with his whims. Since last summer, Putin has cut off natural gas supplies to Europe, hope Europeans shiver in the winter, and without heat, turn around Making it politically impossible to continue to support Ukraine.
The threat was powerful: in 2021, what 83 percent Export of Russian gas to Europe. Russia’s total global exports are 7 million barrels per day of oil and his 200 billion cubic meters (bcm) of pipe gas, accounting for about half of federal revenue. More importantly, Russia’s commodity exports have played an important role in his chain of global supply. Europe is dependent on Russia for 46% of its total gas supply, and is equally dependent on other Russian products such as metals and fertilizers.
As we approach the one-year anniversary of Putin’s aggression, it is clear that Russia has lost forever its former economic power in world markets.
Thanks to an unseasonably warm winter in Europe, Putin’s moment of peak power has passed safely. weather Last October, the biggest casualty of Putin’s gas campaign was Russia itself. Putin’s natural gas clout has ceased to exist as the world, and most importantly Europe, no longer needs Russian gas.
Far from freezing to death, Europe quickly secured alternative gas supplies by pivoting to globalization liquefied natural gas (LNG). This includes an estimated 55 billion m3 from the United States, 2.5 times his pre-war US LNG exports to Europe. These alternative supplies, coupled with increased supplies from renewable sources, nuclear power and, tentatively, coal, have reduced Europe’s dependence on Russian gas. nine percent of total gas imports. In fact, Europe is now buying more LNG than it has bought Russian gas.
Moreover, Europe’s unseasonably warm winter means that not only the worst-case scenario has been avoided, but that Europe’s full storage tanks have hardly been drawn and could carry over into the next winter. In January, German storage tanks were record 91% full, up from 54% last year. This means Europe will need to buy significantly less gas in 2023 than he did in 2022.
The impact is immeasurable. Europe is now guaranteed sufficient energy supply until at least 2024, and there will be enough energy supply to be fully on-boarded and operated within Europe with cheaper alternative energy supplies, both renewables and bridge fuels. We offer time. This includes completing an additional 200 bcm of his LNG export capacity per annum by 2024. This is enough to completely and permanently replace Russia’s 200 bcm of annual gas exports.
Moreover, the era of expensive global energy in a “Russian-led supply crunch” is completely over.In addition to Europe’s expected decline in her LNG demand, China pivot Move away from global LNG in favor of domestic sources.Combined with rapidly increasing LNG supply, the gas futures market is currently pushing gas prices cheap than the pre-war levels for the next few years.
Putin, on the other hand, has no remaining leverage and no way to replace his former main client. He understands that it is much easier for consumers to replace untrustworthy commodity suppliers than for suppliers to find new markets. Hmm. His earlier gas sales of his 150 bcm pipes to Europe Only 16 bcm Exports to China and changing pockets of global LNG sales are barely enough to cover the costs.No market for Putin to replace his near 150 bcm shortfall: China needs pipeline While Russia’s lagging technology makes it possible, it has the ability to take at least a decade longer than that, preferring domestic diversified energy sources anyway. impossible Expand LNG exports beyond the slow trickle.
Putin’s oil leverage has similarly decreased. Gone are the days when oil prices soared for fear that Putin would take Russia’s oil supplies out of the market. 40 percent 2 weeks or more.in fact last month G-7 Crude Oil Price Capwhich we helped develop — Putin announced a ban from February 1st. Oil export to each country Actual oil price with cap price accepted got off.
why? Because it became clear that the world was no longer dependent on Putin’s oil. The oil market is turning in favor of buyers, not sellers, as supplies rise in sufficient quantities to offset a potential drop in Russian oil production. (In December, Russian Deputy Prime Minister Alexander Novak Said Russian media have reported that the government is ready to cut oil production by up to 700,000 barrels in 2023. ) Crude oil prices are now lower than before the war, and in the second half of 2022 alone, undulation Supply of 4 million barrels per day from producers in the United States and elsewhere, Venezuela, Canada, Brazil.even number more New supplies are expected this year, but lost Russian crude will be replaced seamlessly and easily within weeks.And this time Putin can’t force Saudi Arabia will come to the rescue by slashing OPEC+ production quotas, as it did last October. Because America is now. Paused Transfer of critical Saudi weapons and technology amid heightened international situation scrutiny Part of OPEC+’s considerable surplus unused capacity.
Putin’s leverage also evaporated erode Russia’s energy position, no matter what he does. China and India, without explicitly joining the cap, are using it to push for heavy-handed negotiations with Russia. Up to 50% discountso India is buying 33 times With more Russian oil than a year ago, Russia isn’t making much profit considering $44. break even In addition, production costs more expensive shippingBut further cuts in production, as Putin has threatened, would mean he would lose a very important share of the oil market. The long Putin obsessionfurther cut his own income when he is in an increasingly oversupplied oil market already hungry for cash.
Even Putin’s other commodity cards are all exhausted. His ruse to weaponize food his titular allies changed To him. And in certain metals markets historically dominated by Russia, such as nickel, palladium and titanium, buyers fearing blackmail, coupled with higher prices, have encouraged domestic relocation, recovered Dormant public and private investment in critical mineral supply chains and mining projects. These are mainly located in the Americas and Africa, where there are many untapped mineral reserves. In fact, in some important metal markets such as: cobalt When nickelthe combined output of new mines to be opened over the next two years will be enough to replace Russian metals within global supply chains. Permanently.
putin failed economic trickery From his underestimation of the Ukrainian people to his underestimation of collective unity and willpower in the West, yet another series of miscalculations to add to the ever-long list.
Of course, Putin’s failed economic and energy wars were not without consequences. The ripple effect has touched many lives, transformed supply chains and changed trade flows. Consumers are still feeling the high price pinch as newly found low prices take time to make their way through the economy.
But the point is that the end is in sight.Putin never position He caused such turmoil and turmoil in the world economy because he permanently undermined Russia’s most powerful hand, energy and commodities. War on the battlefield is still going on, but at least economically, victory in sight.
