KYIV. UkraineGate , 18 , June , 2022 | Economy.
Russia’s reduction in gas supplies to Europe has long been one of the EU’s biggest fears. This week it became a reality, writes the Financial Times .
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“Moscow’s decision to cut supplies to key customers shattered the illusion that it will not turn away from its largest customers,” the newspaper said.
According to Russia, although it accused the decision to limit the supply of the Nord Stream-1 pipeline to Germany of sanctions imposed after the invasion of Ukraine, “few people in the West are bought on the Moscow line.” Russia has access to alternative supply routes for export customers, but has refused to use them, the publication explains.
Fatih Birol, head of the International Energy Agency, said Gazprom’s cuts were a “strategic” move by Moscow to “remind” Europe that it should not feel “too safe or too comfortable”.
Georg Zachmann, a senior fellow at the Bruegel think tank, accused Moscow of “trying to play divide and rule”, saying President Vladimir Putin’s regime wanted to “increase its influence in Europe on the eve of winter and any possible settlement in Ukraine”.
If Russia does not resume supplies quickly, the industry fears that it will be difficult for Europe to store enough gas in the run-up to the winter months, when demand will be highest.
“But even if supplies are fully restored, this week’s events have finally shattered the once-popular belief that Russia will not turn gas weapons on its biggest customers,” the paper said.
Citi analyst Edward Morse warned that prices are likely to rise sharply this winter to curb demand if Russian supplies do not return.
Gas prices have already jumped – from very high levels – by more than 60% this week to about 130 euros per megawatt-hour. This has heightened global concerns about rising inflation, as central banks try to cope with rising prices without causing a massive economic downturn.
Laurent Ruseckas, a gas market specialist at IHS Markit, said that although Moscow could resume supplies soon, there is a risk that it will strengthen its position and further cut supplies this winter. “There is a growing likelihood that this is a prelude to the main show,” he said, adding that he feared Moscow would see an opportunity to ease sanctions by increasing pressure on Europe’s economy.
“If it is clear, we will turn off the gas, if you do not lift the sanctions,” I am sure they will receive a very short answer, “he said. “But I am concerned that Moscow has enough support for this approach to make it quite real,” the expert added.
