With the air and ground attack of the Russian army against Ukraine, the price of fossil fuels is panicking this Thursday. The price of a barrel of Brent from the North Sea, the benchmark for black gold in Europe, had risen 7.84% at midday, climbing to 104.43 dollars. As for the barrel of West Texas Intermediate, it climbed 7.31% to 98.81 dollars. A first since 2014 for these two crude references.
Russia is one of the world’s leading oil producers, panicking investors about possible disruptions in the supply of hydrocarbons. “In the event of a partial interruption of Russian oil deliveries, the other major producing countries could only compensate to a limited extent,” warns Carsten Fritsch, an analyst at Commerzbank.
Natural gas prices skyrocket by 40%
Russia is also the world’s largest exporter of natural gas. The Old Continent imports about 40% of its needs from Russia. There is no immediate solution to replace imports from Russia on the European gas market. “If Russian gas does not come to Europe, we have a real subject of gas prices in Europe”, warned the president of the French energy giant TotalEnergies Patrick Pouyanné.
The price of natural gas thus soared by 40%, the largest increase in one day since 2019. The reference market in Europe, the Dutch TTF (Title Transfer Facility) rose again, to 129.00 euros on megawatt-hour (MWh).
“Energy bills will continue to rise”
“The oil price spike is terrible news for businesses and consumers, and fundamentally it clarifies one of the main impacts of the war between Russia and Ukraine” on the global economy: “it will serve to fuel more inflation,” said Russ Mould, an analyst at AJ Bell. “Energy bills will continue to rise,” he continues.
French Secretary of State for European Affairs Clément Beaune assured him on Wednesday that Europe had “enough stocks to get through the winter”. A senior American official saw in the Berlin announcement a “major turning point” which “will free Europe from the Russian geostrategic vice” linked to the supply of natural gas.