Opinion: Russia’s Ukraine ambitions threaten to cause a global energy crisis
As the tensions on Ukraine’s border with Russia ratchet up they are increasing the prospect of severe energy shortages in Europe that could spill over into a global surge in already-high energy prices.Europe is heavily dependent on Russia for its oil and gas.The oil prices is at seven-year highs, above $US87 a barrel, as OPEC and its associates struggle to recover the output they cut in response to the outbreak of the pandemic in 2020.
There was a Russian influence on Europe’s gas shortages last year. The effects of a dearth of wind in the North Sea that reduced supply from offshore wind farms and low storage levels were exacerbated by reduced supply from Russia, the source of about 40 per cent of Europe’s gas.
Europe’s reliance on Russian oil and gas gives the Russians a bargaining chip to try to keep Europe on the sidelines and to create division within Europe. The US has lifted exports of LNG to Europe and is encouraging LNG exporters like Qatar to boost supply to Europe and China, awash with gas after last year’s binge, is offering spot LNG cargos.
US shale oil and gas production is already responding to the higher prices – it has displaced Australia as the world’s biggest LNG exporter – and a sector with in-built flexibility will inevitably respond further if the current prices are sustained.
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