Putin’s Dream About Europe’s Energy Collapsed
Putin’s dream about Europe’s energy collapsed as global gas prices, contrary to Russian government’s 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, gas prices would increase due to rising demand in the market.
Reports from reliable global market sources indicate a more than 10% decrease in gas prices in future transactions. According to this report, TTF gas futures for delivery next month have dropped below 190 euros per megawatt-hour. This price, which is the lowest in the past two months, has been recorded while every year with the start of autumn, gas prices would experience 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 unprecedented high gas prices in Europe in recent months. According to the Putin government’s claims, Europe will face a serious crisis due to the fuel price surge in the coming winter, although current events in global markets indicate the baselessness of Moscow’s claims.
The Russians insisted that with the lack of energy supply in the European market, gas shortages 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 trend of gas price changes in global markets suggests that Putin’s harsh winter plan has been foiled.
What is the reason for the gas price drop?
Professional energy market traders believe that the actions of European governments, particularly 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 more than 91% full as of September 27 this year.
Meanwhile, 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 in such a way that it has even surpassed the annual European targets by 3%.
Energy market experts and activists believe that actions by governments like Germany have led to a sharp decline in demand this month, which has also dragged the price down to the lowest level in the past two months. This is while gas prices in the early weeks of the Ukraine war were traded more than 45% higher than the current rate.
It should be noted that the roughly 190-euro price per megawatt-hour of gas relates to futures transactions for next month. In other words, the market has also set its outlook, and it seems that the supply level is so high that, unlike every autumn, market participants 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 storage. Therefore, many energy market experts and activists believe Putin will still be able to use the energy card in the Ukraine war field. However, given the measures European governments have taken, Moscow’s game piece will not be as influential as advertised.
Although it is predicted that if Eastern European countries fail to secure their needed gas resources in winter, Moscow could increase 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.
In recent days, there have been reports of suspicious explosions on the Nord Stream pipeline, which have worried both Russia and Eastern European countries about securing their needed resources for winter. Therefore, energy market traders are looking to Moscow’s supply of liquefied natural gas and are basing their market outlook on this.
Raisi’s Souvenir on the Fragile Kremlin Wall
Developments in the energy market have unfolded in such a way that many experts believe the likelihood of the harsh winter scenario in Europe coming true is almost zero. This was predicted by energy sector specialists who believed Europe would not fall into such a predicament. However, the Raisi government, trusting the Kremlin, overshadowed the JCPOA negotiations with the mythical harsh winter scenario in Europe.
This action by the Raisi government occurred at a time when the unprincipled and strange stances of the Islamic Republic’s negotiating team made the negotiations drawn-out. This approach by the thirteenth government caused the Europeans, who always insist on keeping diplomatic channels open, to become discouraged from continuing negotiations.
Now we must wait and see how individuals like Mohammad Marandi, who was tasked with advising the Iranian negotiating team and constantly spoke of Iran’s harsh winter card, will position themselves now. Although some experts who considered this scenario a delusion months ago believed 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 have for their baseless policies regarding the JCPOA revival negotiations.
If you liked this article, Iran Gate offers two other exclusive reports and analyses related to this article.
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