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Putin’s attack on Ukraine is also an attack on world energy prices


Anti-Russian war protesters flooded the streets of St.Petersburg on Thursday after Russian President Vladimir Putin gave permission military invade Ukraine. (Reuters)

Russian President Putin’s invasion of Ukraine seems like a distant conflict to the Americans more concerned with troubles at homeand our stake in the conflict may be much smaller than that of the Ukrainians, who will suffer and die, but we will feel the effects of Putin’s aggression, most of the time. sold out immediately in the form of high gas prices.

Russia was influencing energy markets even before yesterday’s invasion, the worst security crisis Europe has faced since World War Two. Brent crude on Thursday rose above $105 a barrel for the first time since 2014.

While the threat of invasion spurred the United States gas priceNow that the attack has begun, expect things to get worse.

Like yesterday, AAA puts the national average for a gallon of gas at $3.53. That’s up 4 cents in a week, 21 cents in a month, and 90 cents more than a year ago.

That puts the average price in the 10 most expensive states: California ($4.74), Hawaii ($4.51), Oregon ($3.98), Washington ($3.98), Nevada ($3.95) USD), Alaska ($3.85), New York ($3.75), Pennsylvania ($3.73), Washington, DC ($3.72); and Arizona ($3.71).

President Biden and other Western leaders on Thursday announced a series of sanctions aimed at Putin, other individuals and Russia itself. The US can expect retaliation to those sanctions in the form of Russia withholding oil from world markets. (Retribution can also come in the form of cyberattacks against US governments and businesses.) Russia is the second largest oil exporter in the world after Saudi Arabia and is the third largest oil producer. Market supply has tightened and increased prices.

“Russia is one of the top oil producers globally, just behind the United States and Saudi Arabia,” said Andrew Gross. AAA spokesman. “And if they choose to keep their oil in the global market, such a move will ultimately be reflected in higher gas prices for American drivers.”

The federal Energy Information Administration (EIA) reports that gasoline supplies in the country have fallen – although gasoline demand has fallen more due to high prices. This should drive the price down, but so far it hasn’t.

Russia is also the world’s leading producer of nature Air, a leadership position will only grow with Ukraine’s control. Wars are often contested for natural resources, and that is an important motive in Putin’s actions against Ukraine is rich in resources. His control over its vast coal and gas reserves should concern us, both for immediate energy needs and in global efforts to reduce climate change. Ukraine’s Donbas mining area will be the key for Russia to sign the contract supply China with 100 million tons of coalwith another 40 million committed to India.

European energy prices spiked shortly after Russian forces invaded Ukraine. Dutch gas futures rose as much as 62%, the highest since at least 2005, for the fourth consecutive daily increase. Germany’s power in March increased by 58%. Coal and oil also surged.

The continent depends on Russia for more than a third of its gas supplies, and about a third of that is shipped via Ukraine. Low fuel inventories last year pushed prices to record levels and volumes from Russia have been limited since the second half of 2021.

European coal next year has increased by as much as 24%.

On Thursday, Russia offered to sell its Urals crude at a discount of $11.60 per barrel. No bids. And those who work with Russia are suffering a backlash from the sanctions. Officials at three major tanker companies, two shipping brokers, four oil traders and an oil refinery all said Russia-related activity had been halted for now. The country sends about two-thirds of its exports by sea to final consumers, with most of that cargo handled by merchants.

“European buyers will likely avoid buying Russian crude as long as tensions rise even if the US does not impose sanctions,” said Alex Kavouris, oil analyst at Facts Global Energy. comprehensive punishment”.

Uncertainty in other markets

Sanctions against Russia could also hurt markets for metal goods and even food. Ukraine, known as Europe’s ‘bread empire’, is a major exporter of wheat. It is also a major exporter of nitrogenous fertilizers used by US farmers. And Agriculture Secretary Tom Vilsack has warned fertilizer companies and other farm suppliers not to take advantage of the “unfair advantage” of the Ukraine conflict by cutting prices.

Fertilizers are focused because higher production costs for farmers have contributed to higher food prices.

Below is a list of the main exports of Russia and Ukraine – many of which could affect the global auto industry.

Grains, oilseeds

Russia and Ukraine are major suppliers of wheat, accounting for 29% of total global exports, much of which passes through ports in the Black Sea.

Much of that wheat is exported to major customers in the Middle East and North Africa such as Egypt and Turkey.

Ukraine is also one of the top four exporters of maize (maize) in the world and has shipped around 4.5 million tons per month with major customers including China and the European Union.

The two countries also account for about 80% of global sunflower oil exports.

Gas, energy

Europe depends on Russia for about 40% of its natural gas. Most go through pipelines including Yamal-Europe, which crosses Belarus and Poland to Germany, and Nord Stream first, shipped directly to Germany. Last year, Ukraine was a major transit corridor for gas entering Slovakia, from where it continued to Austria and Italy.

Russia says it will continue to supply natural gas without interruption to world markets.

While EU or US sanctions on Russian gas imports are considered unlikely, damage to the pipeline or Russia’s cessation of gas transit through Ukraine, analysts said. is possible, analysts say, and a complete replacement of Russian gas to the EU will not be achieved in the short term.

Aluminum

Most Russian metal producers have so far escaped sanctions imposed by the West since Moscow annexed Crimea in 2014.

One exception is the world’s largest aluminum producer outside of China, Rusal, which was subject to measures imposed by the United States between April 2018 and early 2019.

Rusal produces 3.8 million tons of aluminum in 2021, about 6% of the world’s estimated production.

Europe, Asia and North America are the main markets of Rusal. Miner and commodity trader Glencore has a long-term agreement through 2025 to purchase virgin aluminum from Rusal.

Cobalt

Data from the US Geological Survey (USGS) shows that Russia produced 7,600 tonnes of cobalt last year, more than 4% of total global production.

Russia is the second largest producer, after the Democratic Republic of the Congo, with an output of 120,000 tons.

Nornickel is the largest producer in Russia, selling 5,000 tonnes by 2021. Nornickel sells most of its production to Europe.

Copper

According to the USGS, Russia produced 920,000 tons of refined copper last year, about 3.5% of total world production, of which Nornickel produced 406,841 tons.

Nickel

Nornickel is the world’s leading producer of refined nickel. It produces 193,006 tons in 2021, representing about 7% of the total global mine production estimated at 2.7 million tons. It sells to global industrial consumers on long-term contracts.

Palladium and platinum

Nornickel is also the world’s largest producer of palladium and a major producer of platinum.

It produced 2.6 million troy ounces of palladium last year, or 40% of global mine production, and 641,000 ounces of platinum or about 10% of total mine production.

Yellow

Russia is the third largest gold producer in the world after Australia and China and account for about 10% of global mining, which, according to the World Gold Council, totaled 3,500 tons last year.

Titan

Russia’s VSMPO-Avisma supplies titanium to Boeing and Airbus.

Data from USGS shows that Russia produced 27,000 tons of foam titanium and Ukraine 5,400 tons last year. Combined they make up about 15% of the global total.

Steel

According to the World Steel Association, Russia produces 76 million tons of steel, accounting for nearly 4% of total global production. Export mainly to Europe.

Severstal, NLMK, Evraz, MMK and Mechel are the main Russian producers. They export about half of their output, mainly to Europe.

Diamond

Alrosa, the world’s largest rough diamond producer by volume, is state-controlled, producing 32.4 million carats in 2021, about 30% of total global production.

Fertilizer

Russia is a major producer of potassium, phosphate and nitrogen-containing fertilizers – nutrients for plants and soil. It produces more than 50 million tons per year, representing 13% of total global production.

Includes Bloomberg and Reuters content.



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