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The prospects of peace and the return of Russian gas looks likely to serve the interests of Donald Trump
The prospect of a peace deal has many wondering whether the energy industry could be upended once again; this time giving way to a market serving the interests of the US president hoping to broker the deal.
Global oil and gas markets have wasted no time pricing in the impact that a peace deal between Ukraine and Russia, one of the world’s biggest energy producers. Christoph Halser, a senior analyst at Rystad Energy, said prices are already falling across Europe and Asia as traders contemplate “a swift comeback of Russia gas”.
Although it would be politically unpalatable for those who argue that Europe’s dependence on Russian gas enabled the Kremlin to weaponise its energy supplies, for many in Europe the opportunity to reverse the economic hardship triggered by its absence will be tempting.
Imports of Russian gas via pipes accounted for around a third of European gas demand in 2021. Before the start of Moscow’s war in Ukraine Russia provided just over half (55%) of all the gas consumed in Germany, which relies on gas for more than a quarter of its energy.
It emerged in January that European officials were already considering whether Russian pipeline gas sales to the EU could be restarted as part of a potential Ukraine peace deal. The suggestion sparked a backlash among countries loyal to Ukraine, according to a report in the Financial Times, but proponents of the idea argue that a return of Russian gas could help ease high energy prices across Europe, which have contributed to the cost of living crisis.
Halser cautioned that although a peace deal could “open the door for Russian gas” the chances of a quick return of supplies via pipelines “remains questionable”.
“European leaders and Ukrainian officials have voiced concern over being excluded from the negotiating process, leaving both likely facilitators and takers of Russian gas alienated,” he said.
Donald Trump, who is brokering the deal, may also have good reason to maintain Europe’s newfound appetite for US LNG. Trump has promised US oil and gas company executives that they will be free to “drill baby drill” – and it would be a clear disadvantage to the US if its eager new market were to shrink by too much.
This may suit European countries too, many of which have invested billions of dollars in developing LNG import terminals to reduce their reliance on gas pipeline imports. Last year more than half of Europe’s LNG was sourced from the US.
The combination of Trump’s pro-hydrocarbon US election victory and Europe’s dash for seaborne LNG imports, along with the potential return of Russian pipeline supplies, threatens to unleash a wave of fossil fuels into the global market.
The post Redrawing of global energy markets map set to heap benefits on US appeared first on Energy News Beat.
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