Pune, India, March 09, 2022 (GLOBE NEWSWIRE) -- The conflicts between Russia and Ukraine have been going on since 2014. However, Russia began the Ukraine invasion on 24th February 2022, which shook the entire world. Russian soldiers took control of strategic positions and infrastructure in Ukraine. Russian missiles destroyed an oil depot in Vasylkiv, near Kyiv. There has been a report of Russian soldiers had blown up a gas pipeline in Kharkiv. The country has also taken over the Zaporizhzhia nuclear power facility of Ukraine.
The war seriously impacted the global oil & gas industry as Kyiv urged for a full embargo for Russian oil & gas. The Ukrainian foreign minister has also taken to their social media and tweeted, “Buying them (Russian goods) will now mean paying for the murder of Ukrainian men, women, and children.” This led world to stand against Russia. The UN has also strongly condemned this act of Russia, while several countries, including the U.S., U.K., Germany, France, Italy, Spain, and many others, have put sanctions on Russia.
U.S. House of Representatives Speaker Nancy Pelosi announced on 7th March 2022 that they are looking for legislation to ban the import of Russian oil and that Congress this week intended to enact $10bn (£7.6bn) of aid for Ukraine in response to Russia's military invasion.
The war resulted in a sharp increase in oil & gas prices. The increase in the price is record-breaking as the prices are approaching USD 130 a barrel. American Automobile Association stated that U.S. petrol prices at the pump soared by 11% over the past week to the highest level since July 2008. The cost of petrol and diesel in the U.K. has risen, and now averages 153p and 157p a liter respectively.
The countries boycotting Russia are looking for alternative oil supplies to fulfill the oil demand. However, on the other hand, Russia is offering discounts of USD 15-20 a barrel which is creating a huge opportunity for some market players to buy at lower prices. For instance, on 4th March, Shell has purchased 100,000 MT of Flagship Urals Crude from Russia at record discounted prices.
As per EIA, Russia is the world’s 3rd largest oil producer, followed by the U.S. and Saudi Arabia, and the country is also one of the largest exporters of crude oil to global markets. In January 2022, The total oil production of Russia was 11.3 mb/d. Whereas U.S. total oil production was 17.6 mb/d and Saudi Arabia produced 12 mb/d. In December 2021, Russia exported 7.8 mb/d. Oil product exports totaled 2.85 mb/d. These numbers themself states the global crisis created in the oil & gas sector due to the action of Russia and the various sanction put on the country by different countries like the U.S., the European Union, and Canada.
The war has even created social pressure over several countries, so even if they want to continue trade with Russia as not all countries can afford to buy such high priced crude oil due to economical un-stability thanks to the pandemic, and at the same time, the oil demand is high in such countries. They have to restrain themselves from buying from Russia.
Even, Organization for Economic Co-operation Development (OECD) countries have released 60 million barrels of oil to the member countries, which can be estimated to be equivalent to 12 days of Russian export. However, the amount of crude oil is not enough to satisfy the market demand as this is just an instantaneous reaction to the horrible price situation, which is supposed to have a short-lived impact on skyrocketing prices.
Other than the energy sector, other sectors are also heavily impacted by war as the Electronic giants Samsung Electronics, global brands such as H&M, Adidas, Apple, Microsoft, Dell have decided to suspend the majority of their services in Russia. At the same time, some companies like Nike decided to suspend even their online activities in the countries whereas Ikea has closed all its stores in the country.
Russian-Ukraine Conflict to Burden Energy Sector- https://www.fortunebusinessinsights.com/oil-and-gas-industry
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