The complexity of energetic chaos by Aldo Santillán Alonso Managing Director & Editor in Chief, Energy Capital Magazine
The world’s spotlights continue to point to the geopolitical crisis in Eastern Europe. Those responsible for global energy policy have not yet identified what could be the best move to protect the world economy from the chaos generated by the absence of Russian crude.
At the time of this article, the European Commission (EC) was working on a document to ban purchases of Russian oil from May more severely. The sanction would contemplate at least 4 million barrels per day.
However, the measure encountered resistance among some of the member countries of the community bloc. Why? Simple. Russian oil is of better quality than crude from other producers, and exchanging it would be doubly expensive; even triply expensive, if oil prices soar to new highs due to the absence of Russian hydrocarbons.
Other countries reaction to this chaos
Likewise, several countries have a great dependence on Russian crude, such as Germany, Greece, Cyprus, Austria, Hungary, and Malta. These countries lack the necessary infrastructure to switch to other alternative energies.
Additionally, high oil prices could trigger unprecedented economic turmoil. The specter of a global “deflation” haunts the five continents. And it is that in addition to the rebound in crude oil prices, the prices of grains and precious metals are also oscillating close to historical maximums. This scenario is adjusting downward expectations of the world’s main economies.
We have a clear example with China, with a significant confinement in Shanghai and growth estimates below 5% for 2022 and 2023.
Despite the well-deserved economic sanctions that Russia may receive for its invasion of Ukraine, applying them is not so easy. Specifically, because the world seems to be headed for an economic slowdown again due to the high prices of various raw materials and new lockdowns in Asia due to the resurgence of the pandemic.
In this complex context, for now, governments and citizens must strive to use less energy. A measure that would initially reduce their bills, adjust the consumption of fossil fuels and reduce greenhouse gas emissions.
