Sanctions on Russia have distorted global energy markets and refinery runs. From Rystad Energy at oilprice.com:
- Diesel and gasoline markets are witnessing crack spreads in the $50-$60 per barrel range due to inventory stocks across the world being at record lows.
- The global oil demand recovery looks resilient as the final Covid-related restrictions are being removed around the world.
- Refining capacity in both Europe and the U.S. has fallen dramatically in the last decade, making the replacement of low inventories particularly difficult.
Global diesel and gasoline markets are witnessing blowout crack spreads in the US$50-60 per barrel (bbl) range, reflecting a clear lag in the refining system to respond effectively and decide between supplying diesel or gasoline. The precarious situation is driven by inventory stocks across the globe being at their lowest levels historically and, therefore, unable to provide the necessary shock absorbers. The loss of Russian refining owing to operational outages and product containment challenges has caused a diesel/gasoline hole greater than 1 million barrels per day (bpd) in Europe that is not easy to plug, Rystad Energy research shows.
“Diesel is the lifeblood of the global economy, essential to vital sectors such as agriculture, construction, and transportation – its price impacts almost all supply chains and goods. Governments face tough decisions. They can assist consumers by dropping taxes on diesel, but this will likely only increase demand, which may support the overall economy but will worsen the existing tight supply situation. If supply does not improve, governments will be forced to enact emergency plans to limit sales to consumers in order to ensure essential sectors are kept going,” says Per Magnus Nysveen, Head of Analysis at Rystad Energy.
Putin is indeed giving Europe the energy middle finger. From Mike Whitney at unz.com:
“Rejection of Russian energy resources means that Europe will become the region with the highest energy costs in the world. This will seriously undermine the competitiveness of European industry which is already losing the competition to companies in other parts of the world…. Our Western colleagues seem to have forgotten the elementary laws of economics, or simply prefer to ignore them.” Vladimir Putin, President of the Russian Federation
On Tuesday, Russia announced a 40% reduction in the flow of natural gas to Germany through the Nord Stream pipeline. The announcement, that was made by Gazprom officials, sent tremors through the European gas market where prices quickly soared to new highs. In Germany—where prices have tripled in the last three months—the news was met with gasps of horror. With inflation already running at a 40-year high, this latest reduction in supply is certain to tip the German economy into recession or worse. All of Europe is now feeling the impact of Washington’s misguided sanctions on Russia. Here’s more from Oil Price website:
“Russia’s Gazprom said on Tuesday that it would limit natural gas supply via the Nord Stream pipeline to Germany by 40 percent compared to planned flows because of a delay in equipment repairs… The lower supply of gas via Nord Stream to the biggest European economy, Germany, sent Europe’s gas prices surging by double digits...
Posted in Economics, Economy, Energy, Eurasian Axis, Foreign Policy, Geopolitics, Governments, History, Politics, Propaganda, Trade, War
Tagged Europe, Russian energy, Sanctions on Russia
If Europe bans Russia energy imports, it will push the continent backward economically, and probably politically. From Jorge Vilches at thesaker.is:
For your own children´s sake — on my knees and with my saddened eyes humbly looking downwards — I beg of you to please stop the current self-destructive nonsense dead in its tracks by immediately demanding from your political class to import the bloody Russian oil normally once again as Europe had been doing for dozens of years. The impact that the ban on Russian oil has upon your daily lives now and for years yonder is such that at the very least a Referendum should have been held. But it was not, and without consultation, the EU leadership acted on their own.
Please be advised that the EU un-elected brass simply does not represent you or your needs. They were all voted amongst themselves into their positions like members of a committee in a private country club. If left unchecked, EU politicians will now continue misrepresenting you and, on your behalf — with your hard-earned assets and livelihoods – will keep on picking a most unnecessary and prolonged armed conflict with Russia, eventually forcing upon you a total war scenario where chances play out all very strongly against you, with Russia probably resulting unscathed.
Europe seems hell bent on cutting off energy imports from Russia. Which raises the question: what is Europe going to use for energy? From Chris MacIntosh at internationalman.com:
Wait, you mean dirty stinky polluting coal? That coal?
Which brings me to….
EU TO BLOCK RUSSIAN COAL
So the EU, already in the middle of the worst energy crisis since the Arab oil crisis and likely worse, is now pushing to eliminate imports of Russian coal. Just so you understand the importance of Russian coal to Europe…
Some 70% of Europe’s thermal coal comes from Russia. Coal accounts for about 20% of continental Europe’s electricity production (as of 2019; perhaps it is 25% now).
Watching the news is enough to drive a man to drink or to put his drink through the telly.
But fear not, there is a silver lining.