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Demonstrative solidarity
: Russia's President
Vladimir Putin
(left) and Alexei Miller, CEO of the state-owned energy giant Gazprom.
If Russia invades Ukraine, gas and oil supplies to Europe are likely to fall massively
Photo: SERGEI KARPUKHIN / AFP
For weeks, Russia has been massing troops on the border with Ukraine and in Belarus.
More than 100,000 soldiers are now creating a potential threat that, according to US secret services, could soon erupt in a warlike invasion.
It is uncertain whether diplomacy will find a way out of this muddled situation.
In any case, equity investors have doubts and pushed the most important indices in Europe deep into the red on Monday.
Conversely, oil prices, which have not been climbing since the beginning of December as part of the economic recovery, continued to rise: Both the North Sea variety Brent and the US variety WTI approached the 100 dollar mark per barrel. They were last at this level in 2014 seen.
Rapidly rising prices for natural gas and crude oil in the course of a military conflict are currently the last thing the national economies need, they are already driving up inflation massively.
In international world trade, Russia, whose national product in 2020 was just half that of Great Britain, does not play a major role.
The sanctions since 2014 in response to the annexation of Crimea also contributed to this.
Observers say that the international stock markets should probably quickly realize this and calm down again.
The world's largest country plays a disproportionately larger role on the international raw materials markets.
Russia exports around five million barrels of crude oil and a further 2.5 million barrels of petroleum products every day - these are 12 and 10 percent of world trade, respectively, according to experts at the Cowen investment bank.
Almost two thirds of Russian oil exports flow to Europe, which makes the old continent Russia's most important trading partner - even ahead of China, according to a recent short study by the German Economic Institute.
China, in turn, absorbs another 30 percent of Russian oil exports.
OPEC can hardly fill the funding gap in the event of war
According to analysts, the crude oil markets are also reacting so sensitively at the moment because the oil-exporting countries (OPEC) have promised to produce and bring more oil to the market, but they have not actually achieved their goal of increasing production by 400,000 barrels a day reach.
The market is questioning Opec's ability to get production back to pre-pandemic levels, The Wall Street Journal quotes Andy Lipow, oil analyst and president of Lipow Oil Associates in Houston.
The London-based data and information service IHS Markit forecasts that global oil demand will increase by up to 4 million barrels a day over the next few months.
In other words:
Russian gas supplies account for a quarter of world trade
But Russia is even more important as a gas supplier.
Russia exports more than 651 million cubic meters of gas every day, about a quarter of world trade.
85 percent of the gas supplied by Russia ends up in storage facilities in Europe - according to Cowen, a large part of it runs through a pipeline network in Ukraine.
A military conflict on Ukrainian soil and/or sanctions are likely to massively impede the transport of the gas to Europe.
European companies are likely to find it difficult to replace these defaults, according to the assessment.
Oil prices and gas prices correlate with each other.
A significant tightening of natural gas supply could also push up oil prices further, as power plants and consumers that run on gas could be forced to use oil instead.
Alternative export market not in sight any time soon
But Russia is also likely to pay a high price if it can no longer deliver oil and natural gas to Europe as usual.
According to investment bank Raymond James, half of Russia's state budget depends on income from oil and gas sales.
Although Russia is trying to deliver more gas to China in particular, the state-owned Gazprom group cannot quickly open up an alternative export market due to the lack of pipeline capacities.
According to the Institute for the World Economy (IfW), around five percent of Russian gas flowed to China last year, but the trend is rising.
Are economic arguments convincing?
Last but not least, a military intervention by Russia in Ukraine should deal the fatal blow to the controversial and completed Nord Stream 2 Baltic Sea pipeline, as US President Joe Biden made unmistakably clear a few days ago.
Chancellor Olaf Scholz is unlikely to say anything else when he meets Russia's President Putin.
According to Raymond James' experts, the end of Nord Stream 2 would mean billions of dollars in write-offs for the state-owned energy company Gazprom.
Whether the power politician Putin is open to such economic arguments, however, is another matter.
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