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Forbes: Russia cuts gas supply to Europe will significantly harm European consumers, as well as consumers in the U.S.

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Russia’s cuts to gas supplies to Europe may have a serious impact on both Europe and consumers in the United States. Forbes columnist Sal Gilberti writes about this.

“The United States is not dependent on Russia for energy, but high fuel prices in Europe would lead to a simultaneous increase in the cost of fuel in America. Moreover, cutting off Russian supplies in winter would cripple the European economy. Consumers in the U.S. will also get theirs because natural gas prices have already gone up 95%,” Gilberti said.

He said consumers in the northern hemisphere are highly dependent on buying gas from Russia because they need it to heat their homes. Moreover, Europe knows firsthand what a harsh winter is like. At the same time, the stoppage of supplies from Russia has already resulted in a huge increase in gas prices for European countries. Moreover, the supply of all gas pipelines from Russia may be blocked, and the marginal prices of gas may be much higher than the current ones.

He added that gas prices in the US will also increase, but not as much as in Europe. However, if Europe does not have enough gas in winter, it will have to buy oil and coal. This will lead to higher prices for all fuels, since hydrocarbons have a synchronicity in price increases, albeit to different degrees. In any case, the European region should now prepare for a cold and dangerous winter season.

Earlier on Wednesday, the publication Politico, citing documents from the European Commission (EC), reported that the European Union wants to limit the price of gas from Russia to a price of €50 per megawatt hour. but they consider this measure risky.

We previously reported that oil prices accelerated on external factors.

Commodities

Oil set for weekly loss on surplus fears despite OPEC+ cut extensions

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By Enes Tunagur

(Reuters) -Oil prices fell on Friday as analysts continued to forecast a supply surplus in 2025 despite the OPEC+ decision to postpone planned supply increases and extend deep output cuts to the end of 2026.

futures were down 66 cents, or 0.9%, to $71.43 per barrel at 1128 GMT. U.S. West Texas Intermediate crude futures were down 65 cents, or 1%, to $67.65 per barrel.

For the week, Brent was on track to fall 2%, while WTI was on course for a 0.5% drop.

The Organization of the Petroleum Exporting Countries and its allies on Thursday pushed back the start of oil output rises by three months until April and extended the full unwinding of cuts by a year until the end of 2026.

The group, known as OPEC+ and responsible for about half of the world’s oil output, was planning to start unwinding cuts from October 2024, but a slowdown in global demand – especially in China – and rising output elsewhere have forced it to postpone the plan several times.

“The outcome of the latest meeting of OPEC+ members surprised us positively … The extension of the production cuts shows the group remains united and is still targeting to keep the oil market in balance,” UBS analyst Giovanni Staunovo said.

Pressuring prices on Friday, analysts reiterated expectations of a supply surplus next year, although some of them now view a smaller surplus than before.

Bank of America forecasts increasing oil surpluses to drive Brent to average $65 a barrel in 2025, while expecting oil demand growth to rebound to 1 million barrels per day (bpd) next year, the bank said in a note on Friday.

HSBC, meanwhile, now expects a smaller oil market surplus of 0.2 million bpd, from 0.5 million bpd previously, it said in a note.

© Reuters. FILE PHOTO: Crude oil tanker Otis delivers crude oil for Dangote Refinery in Lagos, Nigeria December 9, 2023. REUTERS/Seun Sanni/File Photo

Brent has largely stayed in a tight range of $70-75 per barrel in the past month, as investors weighed weak demand signals in China and heightened geopolitical risk in the Middle East.

“The general narrative is that the market is stuck in its rather narrow range. While immediate developments might push it out of this range on the upside briefly, the medium-term view remains rather pessimistic,” PVM analyst Tamas Varga said.

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Commodities

Oil pares some gains after source says OPEC+ to delay output hike

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By Paul Carsten

LONDON (Reuters) -Oil prices pared some gains on Thursday after a source told Reuters OPEC+ has agreed to delay a planned oil output hike until April 2025.

was up 24 cents, or 0.3%, to $72.55 a barrel at 1237 GMT. It had been at $72.84 before Reuters reported the delay.

U.S. West Texas Intermediate (WTI) rose 25 cents, 0.4%, and was trading at $68.79 a barrel.

The planned delay comes as OPEC+, made up the Organization of the Petroleum Exporting Countries plus allies including Russia, tries to support prices as it wrestles with weak demand, notably from China, and rising supply outside the producer group.

“It will not make next year’s oil balance tight and supply surplus is still anticipated,” said Tamas Varga of oil broker PVM. “This view was mirrored in the gut price reaction.”

There remains the question of how long the delays could last, with this only the latest in a series. OPEC+ was originally due to begin raising output in October as part of a plan to gradually unwind the group’s most recent layer of output curbs of 2.2 million barrels per day.

“They reiterate that these barrels will indeed come back,” said Bjarne Schieldrop, chief commodities analyst at SEB. “It’s a limited time frame. This means there is no upside to the oil price in the next couple of years.”

Elsewhere, a larger-than-expected draw in stockpiles last week also provided some support to prices.

© Reuters. FILE PHOTO: An oil pump is seen operating in the Permian Basin near Midland, Texas, U.S. on May 3, 2017. Picture taken May 3, 2017. REUTERS/Ernest Scheyder/File Photo

In the Middle East, Israel said on Tuesday it would return to war with Hezbollah if their truce collapses and its attacks would go deeper into Lebanon and target the state itself.

Meanwhile, Donald Trump’s Middle East envoy has travelled to Qatar and Israel to kick-start the U.S. President-elect’s diplomatic push to help reach a Gaza ceasefire and hostage release deal before he takes office on Jan. 20, a source briefed on the talks told Reuters.

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Commodities

OPEC+ likely to extend oil output cuts to support market- report

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On Thursday, OPEC+ is expected to postpone its planned increase in oil production, which was initially scheduled to commence in January, Reuters reported.

The decision to maintain current output levels aims to provide additional support for the oil market. The group, responsible for about half of the world’s oil supply, had intended to start easing output restrictions through 2025 but is now reconsidering in light of a global demand slowdown and increased production from non-member countries.

The consortium’s plan to unwind output cuts has faced challenges due to these market conditions, which have also exerted downward pressure on oil prices.

Accordingly, an extension of the current output cuts for an additional three months is the most probable outcome of the online meeting. However, there are indications that an even longer extension could be under consideration.

The deliberations within OPEC+ reflect the group’s ongoing efforts to balance oil supply with fluctuating global demand. The decision to delay the increase in output is seen as a measure to stabilize the market, which has been affected by various economic factors.

Market participants are closely monitoring the developments from OPEC+’s meeting, as the group’s decisions have significant implications for global oil supply and pricing. The final outcome of the meeting, including the length of the extension, will be determined by the consensus of the member countries.

This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.

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