Vladimir Putin’s energy war against Europe is failing, an article published this Monday, April 19, shows The Wall Street Journal. The Russian president has significantly reduced supplies of natural gas to mainland countries to pressure them to stop supporting Ukraine. However, the price of the input is getting lower and lower. And Moscow’s finances are deteriorating as Europeans hatch plans to deal with Russia’s gas shortages.
Signs that Putin’s economic strategy is failing have coincided with Russian battlefield setbacks as Ukrainian forces retook areas occupied by the Kremlin.
The European Union (EU) claims the Russian President’s intention is to inflict pain on families and businesses on the continent. The idea would be to pressure countries’ citizens to protest against their governments to stop imposing economic sanctions on Moscow.
Russia is not sure if it will lose this fight. But there is growing consensus among officials, energy experts and economists: While Russian actions will cause serious problems for Europe, Putin’s plans are likely to fail. According to experts, Europeans can get out of the winter without facing fuel shortages. Once winter is over, the exKGB agent will have less bargaining power.
Moscow’s energy bonanza is waning as natural gas exports fall and oil prices plummet. Brent crude, the global benchmark, has fallen to around $90 from more than $120 a barrel.
Last week, the EU put forward proposals to ease the pressure on consumers, including mandatory limits on electricity use. Some energy experts fear that direct government subsidies for energy will thwart efforts to contain demand.
The coming winter is the time of greatest vulnerability for European governments. When the season is rougher than usual and leads to increased energy consumption, optimism can evaporate. But there are concrete signs that Russia’s bargaining power is waning. The sharp rise in natural gas and electricity prices after the temporary closure of the Nord Stream gas pipeline quickly reversed.
On Friday the 16th, gas was trading at around 185 euros per megawatt hour. That’s nearly three times what it was a year ago and more than double what it was in June, when the Kremlin ramped up Nord Stream activity. Compared to August, however, it fell by more than 45%.
Alternatives to Russian supplies, including LNG from the United States and elsewhere, are helping to fill some of the gap created by the Nord Stream closure. Underground gas storage reached 85% of capacity, surpassing the EU target of 80% by the end of October.