Russia is an irreplaceable factor in the global energy market, according to the US credit rating agency Fitch.
If Western sanctions lead to a complete cut in Russian oil exports, the world could see an international energy market collapse, said Dmitry Marinchenko, senior director of Fitch's Natural Resources Group.
Speaking in an interview with Russian news agency TASS on February 22, Dmitry Marinchenko explained that the current surge in oil prices would be mitigated if there were no further escalation around Ukraine. However, further stress could be a disaster.
The current geopolitical surplus of oil prices is about 15 USD/barrel. If everything goes in the most calm scenario, which means there will be no more escalation, no minimal sanctions to affect the oil and gas sector and the frozen conflict, this geopolitical surplus will be lost, said Marinchenko.
In a more optimistic scenario, as the escalation around Ukraine continues to increase and the West imposes severe sanctions on Russia's energy sector, Mr. Marinchenko said that oil prices could exceed $100/barrel. This would lead to an energy crisis, experts say.
Fitch analyst explained the worst-case scenario prediction by emphasizing that no other country could replace Russia's natural resource exports.
Russias share of the world oil market is over 10%. There is no replacement. There are very few oil reserves left, especially as demand is gradually recovering, he said.
On February 22, after Russia's decision to recognize the independence and sovereignty of the two breakaway People's Republics of Donetsk and Lugansk in eastern Ukraine, the US and the European Union announced the imposition of new sanctions on Russia.
RT reported that US President Joe Biden has announced the "first sanctions" applied to Russia's largest financial institutions, as well as "the Russian elite and family members". President Joe Biden said he is also working with Germany to block the operation of the Nord Stream 2 pipeline and cut off "the Russian government from Western funding".
On the same day, German Chancellor Olaf Scholz asked the German Economy Ministry to take steps to ensure that the gas pipeline system from Russia to Germany cannot be certified at this time and that without certification, Nord Stream 2 cannot operate.
Following Germany's move, Dmitry Medvedev, deputy head of Russia's Security Council, warned that Europeans would soon have to pay 2,000 Euros ($2,200) per thousand cubic meters of natural gas.
German Chancellor Olaf Scholz has ordered the suspension of certification of the Nord Stream 2 gas pipeline. Yes, welcome you to a new world, where Europeans will soon have to pay 2,000 Euros per thousand cubic meters of gas! - former President Medvedev wrote on Twitter.
The $12 billion Nord Stream 2 pipeline, owned by Russian state energy giant Gazprom, is capable of transporting 55 billion cubic meters of natural gas annually from Russia to Germany. When put into operation, the pipeline could be the answer to Europe's current energy crisis and help replenish the continent's reserves, which were in a state of gas exhaustion, leaving less than 5% last week.
Although completed in August last year, the pipeline hit a wall in Europe's administrative system, and has yet to deliver a single cubic meter due to waiting for certification. The US and Ukraine, as well as several other Eastern European countries, have opposed the start of Nord Stream 2, saying it would allow Moscow to use it as a political leverage for Europe.
