The energy momentum between Russia and the West has triggered volatility in hydrocarbon markets. Gas and oil prices have seen wide swings this week, prompted by Russia’s introduction of a ruble-only payment system for Russian gas and the announcement of a “historic” oil injection from US reserves to mitigate the impact of energy prices on its economy. In that regard, natural gas futures are up more than 10% since Monday, while the price of a barrel of Brent oil is down nearly 13% this week.
Friday was the first effective day that Vladimir Putin’s government demanded payment for gas in Russian currency. According to a decree signed by the Russian president on Thursday, from now on countries classified as hostile – the EU, Britain and the US – wanting to buy gas must comply with this system or their contracts will be suspended for “non-compliance”. .
Moscow said the transactions would be handled through Gazprombank, the banking subsidiary of Russia’s state gas company Gazprom and one of the few banks to have escaped sanctions – and one of the main channels for buying oil and gas from the West. . Customers are required to open two bank accounts in Russia, one in foreign currency and one in rubles, through which payments to the gas company are made.
Gazprom said on Friday that it has already sent the relevant documents to its main customers, including the main energy companies in Germany, the Nordic countries and areas of Central and Eastern Europe. According to a company spokesman, the Austrian energy giant OMV was one of the first to initiate the accession process.
Algeria’s communication to Spain
Possible review. Barely 10% of the gas that Spain consumes comes from Russia, and its main supplier is Algeria, which this Friday published a statement on the possibility of a price change. Sonatrach said this Friday that Algeria had decided to keep the prices of its supply contracts, which it considers relatively correct. However, as acknowledged by the CEO of this state-owned company, Tewfiq Hakkar, “he does not rule out a recalculation of the price of our Spanish customer”.
Crude oil prices plummeted after it was revealed the United States plans to release 1 million barrels a day from its reserves for six months to ease inflationary pressures. The measure compensates for the position of OPEC+, which reaffirmed on Thursday that it would not increase its oil production representatively in May.
On that note, Citi assures that the US appears to have taken steps to guarantee it can deliver the volumes promised, even though it has never produced that much oil from the reserves. Likewise, Goldman Sachs lowered its price forecasts for this year but raised the estimate for 2023, arguing that the move won’t solve a long-term supply crisis. According to Intercontinental Exchange data, futures prices are not expected to drop below $100 a barrel until October 2022.
An economic support
Russia’s economy has slumped after a month of war with Ukraine, but hydrocarbon sales are bolstering the Eurasian country’s accounts. Oil and gas account for about half of Russia’s exports and contributed about 40% of budget revenues last year, so rising prices for these commodities favor them.
In this sense, the Bloomberg agency calculates that Russia could earn almost 21,000 million euros this year thanks to energy exports, a figure more than 30% higher than its earnings in 2021. However, analysts warn of an energy embargo by the EU and The United States would result in a more than 20% drop in Russian production and could cost them up to $300,000 million in hydrocarbon revenues.
The energy pulse remains unbroken: countries such as Germany and Austria have already launched contingency plans in the face of a possible Russian supply disruption. And Moscow signaled on Friday that it will not immediately stop gas supplies to enemy countries that do not pay in rubles. At least not before the second half of April.