It was to be Russia’s deadly weapon to bend the West: plunge its residents into a hellish, cold and black winter. It ends up being an almost complete flop. As various Bloomberg articles explain, Russian President Vladimir Putin has failed, at least so far, in his attempt to weaponize gas and oil, his nation’s twin breasts, in the war in Ukraine.
Let’s start with the gasoline. As Bloomberg and the German energy minister believe, the worst is behind us. And when Europe’s finances have been and will be tested (we are talking about a cost of around EUR 950 billion), when certain industries, large or small but all vital, suffer terribly from the rise in tariffs, total collapse that Russia aspired to did not materialize.
The meteorologically rather mild last few weeks are not in vain. But that’s not the only factor: the continent as a whole knew how to prepare for the worst in good time.
Extremely dependent on Russian gas, particularly in the case of Germany, Europe has been able to diversify its supply and develop new infrastructure at a rapid pace. And in particular its terminals for liquefied natural gas (LNG), which it now imports massively from the USA in addition to gas from Qatar, Algeria and Norway.
As for LNG imports, which will be eased – for now – by less competition from a China just beginning to revitalize its economy, Morgan Stanley believes the situation is such that too many cargo ships are reaching European shores.
Add to that a significant drop in European consumption — Bloomberg cites the figure of a 16% drop from the average over the past five years — or a few weeks of solid renewable energy production, particularly wind power, with Russia partially offside when it comes to gas . Imports were divided by five, which is significant.
Black gold is black
Ultimately, European gas stocks are at their highest in the dead of winter, which seems to indicate that the continent can face next winter with a little more composure than it has for the current season, barring a catastrophe. The price of this gas on the energy markets has collapsed: if it stays high, it has returned to pre-war levels in recent weeks.
And oil? It’s no better for Vladimir Putin. It’s something of a hoopla for the Kremlin lord even in these last few days, who sees the second pillar of his strategy collapsing. As also described by Bloomberg, the black gold of the Urals has lost so much of its luster that on Tuesday January 10 it was selling at half the price of the rest of the world market, or $38 a barrel.
That is well below the cap set by the G7 and the European Union, which no longer has to be, since the slump in Russian oil is so great. On December 5, the European embargo on Russian hydrocarbons came into effect, causing Moscow to lose one of its largest historical customers.
For months, Russia has been turning to India or China to sell its black gold, but demand there too appears to be falling, particularly at prices that are competing with Middle Eastern oil as the cost of longer sea transportation has risen .
In short, the catastrophe did not happen for the West and Ukraine’s allies. With a skyrocketing budget deficit, Russia’s economy and the financing of its war in Ukraine are already suffering from a sharp drop in revenues from two of its main resources. Those she believed to hold the rest of the world: for now she will be missed.