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Russia slowed its natural gas exports to Europe during the war in Ukraine.
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The move hurts Russia more than Europe, according to a Yale University analysis.
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Russia is now pivoting to customers in the east, while countries such as China and India are negotiating tough.
Russia slowed natural gas supplies to Europe amid war in Ukraine — and commodities giant is under ‘severe strain’ because of it, says Yale analysis found.
“In contrast to widespread alarm about the negative impact of the war between Russia and Ukraine on world commodity prices, the importance of Russia’s commodity exports to the rest of the world has been criticized. , ”the expert wrote in the analysis. Released on July 20th.
Europe depends on Russia for 40% of its total demand for natural gas, from home cooking to thermal power plants. We are plagued by the winter energy crisis. Russia reduced the flow of natural gas To the continent, citing sanctions-related challenges.
Still, in the long term, the Russian economy will be “the hardest hit by changing the natural gas supply chain,” write the Yale University authors.The reason is EU has already agreed to ban He said he would cut almost all Russian oil imports from the end of 2022 and cut coal imports from mid-August.Multiple European countries including Germany and Italy, We are also working to wean ourselves from Russian gas.
Russia’s total export revenue comes overwhelmingly from commodities. “These export revenues have accounted for well over half of Russia’s total government budget in most years and are probably an even larger share now,” the Yale team wrote.
The study, led by Professor Jeffrey Sonnenfeld of the Yale School of Business, found that Russia’s economy is “teetering” from widespread international sanctions. The survey results were the study Shows Russia’s economy is holding up better than expected robust take From its large oil and gas industry.
Putin pivots east to sell Russian energy, but buyers push hard bargains
To mitigate the impact of declining energy sales to Europe, Russian President Vladimir Putin is touting discounts on Russia’s energy exports to other markets such as Asia.
“Isolation from the West has destroyed Russia’s strategic prowess in negotiating with Russia. China and India, It’s a notoriously price-conscious buyer who maintains close relationships with other major commodity exporters,” the Yale team wrote.
“These countries have not hesitated to take advantage of sanctioned pariah countries before. Iran and Venezuela Regularly,” the author added.
Since the invasion of Ukraine, the price of Russia’s flagship Ural oil has dropped significantly. The Ural price was at a premium of $1.50 to international Brent crude in January and February before falling to a discount of $25.80 to Brent. bloomberg Compilation of data from the Ministry of Finance of Russia and the Intercontinental Exchange.
“Russia is now coping from a weaker position after losing its former major market,” the Yale University team wrote, adding that Russia’s strategic position as a commodity exporter has “irrevocably deteriorated.” I have,” he added.
Read the original article at business insider