Putin’s Dream of Europe’s Energy Went Up in Smoke
Putin’s dream of Europe’s energy went up in smoke as global gas prices, contrary to Russian government propaganda about skyrocketing prices in the cold season, have taken a downward trend. This has happened at a time when traditionally, at the beginning of autumn, due to increased demand in the market, gas prices would also rise.
Reports from credible sources in global markets indicate a more than 10% decrease in gas prices in future trades. According to these reports, TTF gas futures for delivery next month have fallen below 190 euros per megawatt-hour. This price, which is the lowest in the past two months, has been recorded at a time when every year with the start of autumn, gas prices would face a significant jump.
So what happened to the harsh winter?
The sharp drop in gas prices has occurred while the Russian government and some of Putin’s allies have consistently reported unprecedentedly high gas prices in Europe in recent months. According to the claims of the Putin government, Europe will face a serious crisis due to the surge in fuel prices in the coming winter, although current developments in global markets indicate the baselessness of Moscow’s claims.
The Russians insisted that with the lack of energy supply in the European market, the gas shortage in Western bloc countries would be rampant, and metropolises like Berlin, Paris, Oslo, and Stockholm would be buried under snow and ice. However, evidence from the changing gas price trends in global markets indicates that Putin’s harsh winter plan has been foiled.
What is the reason for the gas price drop?
Professional energy market traders believe that actions by European governments, especially Germany, to increase gas storage levels for winter are the main reason for the sharp price drop. According to reports, storage facilities in Germany were over 91% full by September 27 of this year.
This is while the average gas storage in the European Union in past years was slightly more than 88%. In fact, the German government has filled its storage facilities with gas reserves in a situation where it has even surpassed the annual European targets by 3%.
Energy market experts and activists believe that actions by governments like Germany have caused a significant decrease in demand this month, which has, in turn, brought prices down to their lowest level in two months. This is in a situation where gas prices in the early weeks of the Ukraine war were traded at more than 45% higher than the current rate.
It should be noted that the approximately 190-euro price per megawatt-hour of gas pertains to future trades for next month. In other words, the market has defined its outlook, and it seems that supply levels are so high that, unlike every autumn, traders are expecting a sharp price drop.
Will Russia be able to do anything?
Of course, it should not be forgotten that some Eastern European Union countries have not yet succeeded in filling their storages. This is why many energy market experts and activists believe that Putin will still be able to use the energy card in the Ukraine war, but given the measures taken by European governments, Moscow’s move will not be as impactful as advertised.
Although it is predicted that if Eastern European countries are unable to secure their required gas resources in winter, Moscow can raise the price to some extent. However, considering the Kremlin’s urgent need for foreign currency revenues, this is unlikely, but overall, such a scenario cannot be entirely dismissed.
Recently, there have also been reports of suspicious explosions in the Nord Stream pipeline, which have worried both Russia and Eastern European countries about securing their necessary resources for winter. This is why energy market traders are looking to Moscow’s supply of liquefied natural gas, and they base their market forecasts on this.
Raisi’s Memento on the Fragile Wall of the Kremlin
Developments in the energy market have unfolded in such a way that many experts believe the likelihood of the harsh winter scenario in Europe becoming a reality is almost zero. This was predicted by energy sector specialists that Europe would not face such a predicament, but the Raisi government, trusting the Kremlin, completely overshadowed the JCPOA negotiations with the illusory harsh winter scenario in Europe.
This action by the Raisi government was taken in a situation where the unprincipled and strange positions of the Islamic Republic’s negotiating team made the negotiations protracted. This approach by the thirteenth government caused Europeans, who always insist on keeping diplomatic channels open, to become discouraged from continuing negotiations.
Now we must wait and see what stance individuals like Mohammad Marandi, who was tasked with advising the Iranian negotiating team and constantly talked about the harsh winter card in Iran’s hand, will take. Although some experts who considered this scenario a delusion months ago believed that consulting such elements was the main reason for the failure of negotiations over the past year.
Now we must wait and see what justification Ali Bagheri Kani and the Islamic Republic’s negotiating team will provide for their baseless policies regarding the JCPOA revival negotiations.
If you liked this article, Iran Gate offers you two more exclusive reports and analyses related to this article.
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