Why oil and gas prices increasing due to Russia war

Fuel prices have soared since Russia's invasion of Ukraine

Russia says it's no longer supplying gas to Poland and Bulgaria after the countries refused to pay for their supplies in roubles.

Despite the invasion of Ukraine, Russia has continued to supply a large amount of gas to many European countries.

However, after Western powers placed financial sanctions on Russia, President Putin announced that "unfriendly" countries would have to pay for gas in Russian currency.

The Russian-state-owned energy company Gazprom has said it has cut off supplies to Poland and Bulgaria and will not restart these until payments are made in roubles.

 

 

How much oil and gas does Russia supply to Western countries?

In 2019 Russia accounted for 41% of the EU's natural gas imports.

If Russian gas supplies to Europe dried up, Italy and Germany would be especially vulnerable as they import the most gas.

Russia only provides about 5% of the UK's gas supplies. Russia sends gas to Europe through several main pipelines. The gas is collected in regional storage hubs, and then distributed across the continent.

Poland's gas storage is currently 76% full, but Bulgaria's sits at just 17%. But Bulgaria says it is looking to increase the amount of gas it receives from Azerbaijan, as well as making deals with Turkey and Greece.

Poland is building a new pipeline connecting it to Norway's gas fields, which is set to be complete in October 2022, and is ramping up supply from neighbouring Lithuania.

Europe could turn to existing gas exporters such Qatar, Algeria or Nigeria, but there are practical obstacles to quickly expanding production.

The US has agreed to ship an additional 15 billion cubic metres of liquified natural gas (LNG) to Europe by the end of this year.

Europe could also ramp up the use of other energy sources, but doing so is not quick or easy.

The EU has proposed a plan to make Europe independent from Russian fossil fuels before 2030 - including measures to diversify gas supplies and replace gas in heating and power generation.

The US has declared a complete ban on Russian oil, gas and coal imports. The UK is to phase out Russian oil by the end of the year and the EU is reducing gas imports by two-thirds.

Russia is the world's third biggest producer, behind the US and Saudi Arabia. Of about five million barrels of crude oil it exports each day, more than half went to Europe, before sanctions were announced. Russian imports accounted for 8% of total UK oil demand and 3% of US demand. In early April, Russian oil production had dropped by 700,000 barrels a day, according to the IEA. This follows European buyers seeking alternative suppliers, and the US banning Russian oil imports altogether in early March. Russia may try to find new markets for its oil in Asia or elsewhere, but if the drop in production continues, it could eventually impact the country's economy. US President Joe Biden ordered a major release of oil from America's reserves in an effort to bring down high fuel costs. The US also wants Saudi Arabia to increase its oil production and is looking at relaxing sanctions on Venezuela's oil.

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