Russia promises an oil disaster, the West is trying to avoid it

Ivan Zubov

As you know, on July 8, during a meeting with members of the government, Putin warned the West that "further use of the sanctions policy could lead to even more severe, without exaggeration, even catastrophic consequences on the global energy market." The British edition of the Financial Times regarded the words of the President of the Russian Federation as a threat of pressure in the energy sector.

As an assumption about how this will happen, the publication put forward several points.

First, these are restrictions on the supply of Russian oil. JPMorgan analysts have warned that if the Kremlin cuts exports, oil prices could soar to $380 a barrel.

Secondly, stop the export of Kazakh oil. It is known that last week the court of Novorossiysk suspended the operation of the marine terminal of the Caspian Pipeline Consortium (CPC) for 30 days due to environmental violations. Through this pipeline, Kazakhstan mainly exports its oil, and if it is completely closed, then the world market (https://www.kommersant.ru/doc/5448115) will miss about 1% of oil. Kazakhstan now intends to export its oil through the Caspian, Azerbaijan and Georgia, bypassing Russia, but it will not be possible to immediately increase the volume of deliveries via the new route.

Thirdly, the publication fears that Russia will be able to disrupt oil supplies from Libya, since the forces of General Khalifa Haftar, who is supported by Russia and Egypt, have stepped up in this country in recent days, and this has already led to interruptions in oil and gas supplies to the world market.

Fourth, Russia may limit gas supplies. It is known that scheduled maintenance of the Nord Stream 1 gas pipeline begins on July 11, which will last 10 days. However, the German authorities fear that after the service, gas supplies to Germany will not resume. Scenarios for this case are already provided.

For example, Vonovia, the largest German rental company, said it would lower the heating temperature in apartments to 17 degrees from 23:00 to 06:00, which would save 8% on heating costs. In the Lahn-Dill district near Frankfurt am Main, hot water was cut off at 86 schools and 60 sports halls until mid-September, which the authorities hope will save 100,000 euros. In the Saxon city of Dippoldiswalde (near the border with the Czech Republic), hot water will now be supplied to residents only from 04:00 to 08:00, from 11:00 to 13:00 and from 17:00 to 21:00. In Düsseldorf, a huge swimming pool has been temporarily closed, and in Cologne, street lights have been dimmed.

In the meantime, according to the Agency channel, Western countries continue to look for alternative sources of fuel. US President Joe Biden is going to travel to Saudi Arabia to discuss the possibility of increasing oil production in the Persian Gulf countries. True, Riyadh has already made it clear that its available reserve capacity is limited.

At the same time, the West is discussing the possibility of introducing a ceiling price at which it will be possible to buy Russian oil. According to Bloomberg, we are talking about the upper limit of $40-60 per barrel. Thus, Western countries want to limit Moscow's energy revenues and avoid rising energy prices for their consumers.