The Ukraine – Russia war has now hiked from the stagnant phase to war. Since the conflict began, the US has been fuelling the crisis in Ukraine and incessantly provoking a Russian offence. The warmongering of the Biden administration has sparked off a more dangerous predicament across the world.
Most of the large economies in the world are suffering from the energy crisis. High demands and low supplies have resulted in fuel inflation in the EU and most of the gas is being diverted to Europe, several countries like China and Japan are in distress from a lack of choice when it comes to importing gas.
The Ukraine – Russia pseudo war
It’s been now few months since the Ukraine – Russia border standoff started. Tensions have risen to a level from where a full-scale invasion of Ukraine seems imminent. Russia has already ordered its troops into Ukraine’s territory and Kyiv is expected to fall into Russia’s hands anytime soon. This is a tragic development for global energy supply stability. Gas prices have already gone through roof in several key markets and the situation is only expected to worsen in the coming days.
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The energy crisis in the US
When the domineering gas exporting countries of the world like Qatar, Algeria rejected the US demand for increased gas exports to Europe, Biden decided to sacrifice the US domestic gas requirements to fuel his war in Europe. That’s why now the US has emerged as Europe’s largest gas supplier, overtaking Russia.
Because of this debacle of a policy, US domestic gas supply has suddenly taken a hit. With the supply failing to meet the demand, the US is on the verge of facing severe gas inflation. The price of gas is creating a hole in the wallets of Americans and it is also resulting in the rise of food and commodity inflation in the country.
According to the latest Bureau of Labor Statistics data, the US consumer prices rose 7.5 per cent last month compared with January last year — the fastest annual pace in 40 years. Average petrol prices nationally have jumped to $3.50 a gallon as of Tuesday, their highest level in more than seven years. Also, the west Texas intermediate (the US crude benchmark) rose above $95 a barrel this week for the first time since 2014. It has since receded to roughly $91.50 in hopes of de-escalation from the Ukraine crisis.
The energy crisis in China
As an effect of a severe winter across China and a super high demand for heating requirements, the domestic LNG prices in China also have surged to a record high. The supply is not able to meet the boosted demand for heating fuel.
According to the Shanghai Petroleum & Natural Gas Exchange, the national average price for the fuel, carried by trucks to factories or vehicle refuelling stations, rallied nearly 80% in the last month to a record 8,114 yuan per ton (about $27.5 per million British thermal units) on Tuesday. Temperatures in Beijing were below the seasonal average from February 12 to 22 and are forecast to remain frigid for a long time to come.
Cold waves have moved from the north to the south this week, bringing snowfall or heavy rain to southern China. Temperatures will remain low according to a forecast by the China Meteorological Administration. This indeed is a pressing dilemma for the Chinese as a whole.
The Tianjin LNG import terminal, located close to northern China, has curbed trucked deliveries of the fuel to prioritize supplies for heating. Some places in Xinjiang have already cut supply to the industrial and transport sectors to secure gas for residential use.
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With colder weather depleting inventories across northern parts of the country, China may seek to snatch up LNG cargoes from the spot market, further tightening global supplies. Importing countries are already scrambling for LNG as Europe grapples with low inventories and fears that Ukraine’s tension may disrupt Russian supply.
Europe was already suffering from a limited supply of gas, and now China and US have joined it as the biggest sufferer of the Biden administration fuelled war between Russia and Ukraine.