Europe’s Energy Dependence on Russia
Europe will wean itself off of Russia’s energy supply. Still, doing so overnight would plunge the continent into a recession, jeopardizing hundreds of thousands of jobs and entire industrial sectors, German Chancellor Olaf Scholz said on Wednesday.
In a budget speech to parliament, Scholz took a more cautious approach to reduce Germany’s reliance on Russia than some of his ministers, who have left the possibility of energy sanctions open – albeit only in theory at this point.
The chancellor assured Ukrainian President Volodymyr Zelensky, who spoke to the Bundestag last week, Germany’s support for his country, and said sanctions were harming Russia.
Oil prices rose in volatile trading on Wednesday, boosted by the disruption of Russian and Kazakh crude exports through the CPC pipeline.
At 1100 GMT, Brent crude futures were up $3.13, or 2.7 percent, to $118.61 per barrel. Prices had previously dropped to a low of $114.45.
West Texas Intermediate (WTI) crude futures in the United States rose $2.69, or 2.5 percent, to $111.96 per barrel. The contract had previously fallen to a low of $108.38.
The market is still concerned about the prospect of additional sanctions against Russia, the world’s second-largest crude exporter, following its invasion of Ukraine, which Moscow describes as a “special operation.”
When US President Joe Biden meets with European leaders in Brussels on Thursday, including an emergency NATO meeting, he expects to announce additional Russian sanctions.
Member countries of the European Union are divided on prohibiting imports of Russian crude and oil products, which are still flowing; however, this may change once short-term contracts expire. Because of storm-damaged berths, Russia warned Tuesday that oil exports via the Caspian Pipeline Consortium (CPC) reduced by 1 million barrels per day (BPD), or 1% of global oil production.
According to a port ship agent, CPC exports ceased utterly on Wednesday, and repairs will take at least one and a half months.
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