Source: CNN Money
Oil prices spiked nearly $2 a barrel Monday on escalating tensions in Ukraine, but experts say the world’s need for Russian oil and natural gas — and Russia’s need for the revenue generated — should ensure the taps stay open throughout the crisis.
Russia’s energy exports are huge. The country sends more than 7 million barrels of oil a day to the world markets — a number roughly equal to what the United States imports. While a disruption of that size may be temporarily covered by production increases from other countries and by tapping reserves, the impact on oil prices would likely be crippling for the global economy.
For the Russians, the trade in oil — and to a lesser extent natural gas — earns the country 70% of its $515 billion in annual export revenue and accounts for 52% of the federal budget, according to the U.S. Energy information Administration.
Because of this, it’s thought that any sanctions that might be imposed on the country for its adventures in Ukraine would be limited in scope and exclude oil or gas.
“Disruption to energy trade would be in neither side’s interest,” analysts at Capital Markets wrote in a note Monday. “We suspect that any Western sanctions will only target individuals, and political and cultural links, rather than trade.”
As such, the surge in oil prices Monday is being viewed as temporary.
“The pullback will be equally measured, if the fever breaks,” Mike Fitzpatrick, editor-in-chief of Kilduff Report’s Energy Overview, wrote in a note.
Related: How the markets should read the Ukraine crisis
Natural gas is a slightly different story. Europe currently gets about 25% of its natural gas from Russia. That gas is used to produce electricity, heat homes, and in the making of fertilizer and cement.
Categories: Europe and Australia, Russia, Ukraine
A Message of Peace and a Word of Warning should be read and understood by all ahmadies, but also by humanity in general. See: http://www.alislam.org/library/books/messageofpeace/messageofpeace.pdf
I suppose the West would be mislead if they think they can impose ‘limited sanctions’ without counter-measures. Russia can close the ‘gas tap’ and Europe would freeze in the winter and eat uncooked food all year round. Yes, Russia needs the revenue but so does Europe need the gas … Let’s see what the big kids (politicians) will come up with …