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Gas and Oil Prices Affected by Ukraine Crisis

Gas and oil prices have risen amid fears the Ukraine crisis could have a damaging effect on one of Europe’s main energy supply routes. But analysts say high European gas stocks will limit the turbulence. Gas futures climbed by up to 10% in early trading, while the benchmark price for oil rose by more than 2%. Traders are worried about the stability of supplies from Russia, which provides a quarter of Europe’s natural gas, half of it through Ukraine. However, a relatively mild winter has reduced demand for heating fuel, with storage levels at the main gas hubs about 20% greater than last year. In Germany, Europe’s biggest gas consumer and Russia’s largest customer, stocks are at more than 60% of capacity, capable of satisfying 60 days of demand.

Russia is Europe’s biggest supplier of natural gas, but the continent has been weaning itself off dependence on its neighbor for the last decade.It now imports less than 30% of its natural gas from Russia, compared with 45% in 2003, according to European Union statistics. Europe is also less reliant on the Ukraine link, with improved gas infrastructure now meaning supplies could go via alternative routes in the event of disruption.

Concerns about one of Europe’s key gas supply routes have had a knock-on effect on other commodities, especially oil, as demand for alternative fuels increased. The benchmark oil price, Brent Crude, rose to a peak of $112.10 per barrel in early trading, its highest since 30 December. Its rise is also due to concerns about oil supplies from Russia, one of the world’s largest oil producers, as well as the impact of any disruption in the gas market.

Source: BBC News


  1. devin devin

    In terms of the US economy one possible positive of this situation is our potential to increase our natural gas exports in this time of uncertainty. Increasing exports could help us lessen the leverage of Russia in Europe and serve as slight bolster to current domestic economic conditions by providing jobs and increasing revenues.

  2. gjeong gjeong

    It is really funny to see Russia invading Ukarine right after hosting /finishing the 2014 Winter Olympics, which is basically for peace.
    As you mentioned above, I am pretty sure that the crisis will affect the gas supply in the world. However, it is also a good sign for the States (as devin said). The consumers in Europe will eventually import the U.S. gas if there are problems in Russia. However, I hope Russia does not go too far.

  3. James Dillard James Dillard

    Russia would not be invading to literally go to war but serve as a bargaining chip in regards to the southern most area attempting to annex themselves from Ukraine. The crimea region, currently inhabited by Russians as well as Ukrainians is split 50 to 50 on the prospect of joining Russia and with the parliament passing of this regiona annexation has prompted Russia to offer its full help and care.

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