Europe lost nearly $1 trillion to escalating energy prices due to anti-Russian sanctions
Despite LNG imports, the market is expected to remain tight until 2026. (Photo: Cubasí)
Europe lost nearly $1 trillion due to escalating energy prices due to anti-Russian sanctions, Bloomberg agency estimated. But the worst crisis in decades has only just begun, the media warn.
“After this winter, the region will have to replenish its gas reserves with almost no supplies from Russia, which will intensify competition for tankers. Despite LNG imports, the market is expected to remain tight into 2026 when additional production capacity from the US to Qatar will become available. That means there will be no break from high prices,” the publication reads.
Although European authorities managed to help businesses and consumers weather the crisis by providing more than $700,000 million, the state of emergency could last for years, the article warns. As interest rates rise and the economy is likely already in recession, the relief measures that have softened the blow to millions of homes and businesses are becoming increasingly unaffordable.
The Bloomberg analyst warned that it will be much harder for governments to face this crisis next year as these countries’ fiscal capacities are already exhausted. Around half of the Member States of the European Union have debts that exceed 60% of gross domestic product (GDP).
Bloomberg announced that despite record-breaking prices last summer, the block has managed to replenish its reserves, reducing the supply gap. Still, freezing temperatures are putting Europe’s energy system to the test for the first time this winter. In particular, the German grid regulator warned last week that not enough energy is being saved.
Overall, the EU managed to cut gas demand by 50 billion cubic meters this year, but the region still faces a potential deficit of 27 billion cubic meters in 2023. In that case, Russian supplies are expected to fall to zero and China’s LNG imports to return to 2021 levels.
The main source of gas from Russia to Western Europe was the Nord Stream gas pipeline, which was damaged in an act of sabotage in September. At present, the European bloc continues to receive a lot of Russian supplies through Ukraine.
European countries are experiencing an energy crisis due to restrictions on Russian fuels due to the special military operation launched in Ukraine last February. Russian President Vladimir Putin claimed the sanctions had dealt a severe blow to the entire global economy, also noting that the West aims to worsen the lives of millions of people.
According to him, an unprecedented aggression was imposed on Moscow by sanctions aimed at crushing the Russian economy in the short term, “collapsing the national currency, the ruble, by stealing our foreign exchange reserves and provoking destructive inflation.” However, he stressed, the West’s plan had not been successful.
