Rising Tensions in Ukraine... Is an 'Energy Crisis' Coming?

Pro-Russian Forces in Ukraine Declare 'Military Mobilization Order'
Russia May Cut Gas Supply if Western Sanctions Persist
Annual Natural Gas Supply Could Decrease by 1.19 Million Tons
International Oil Prices Expected to Surpass $150 per Barrel

Ukrainian Soldier Carrying Anti-Tank Weapon During Training for Russian Invasion
(Donetsk AP=Yonhap News) On the 15th (local time), during a joint military exercise in the Donetsk region of eastern Ukraine preparing for a Russian invasion, a soldier is carrying the next-generation lightweight anti-tank weapon NLAW, supported by the United Kingdom. 2022.2.16
leekm@yna.co.kr
(End)

＜Copyright(c) Yonhap News Agency, Unauthorized reproduction and redistribution prohibited＞

[Asia Economy Sejong=Reporter Lee Junhyung] As concerns over Russia's invasion of Ukraine grow, voices warning of an energy crisis are increasing. Analysts say that if Russia halts gas supplies to Europe due to Western sanctions, South Korea will inevitably be directly affected.

According to major foreign media on the 19th (local time), Denis Pushilin, the head of the pro-Russian Donetsk People's Republic (DPR), which controls Donetsk Oblast in eastern Ukraine, declared a "general military mobilization" on the same day. This is intended to prepare for the possibility of war in Ukraine and to protect the eastern conflict zone of Donbas (Donetsk and Luhansk Oblasts) and Russians.

The United States also views the possibility of a Russian invasion of Ukraine as high. U.S. President Joe Biden said in an emergency White House statement the day before, "We have credible evidence that Russian forces intend to attack Ukraine within weeks or days."

Western sanctions against Russia are also considered imminent. The West, including the United States and the European Union (EU), has warned that if Russia attacks Ukraine, it will impose strong sanctions. Earlier, Daleep Singh, Deputy National Security Advisor at the White House, stated, "If Russia's invasion of Ukraine materializes, extensive financial sanctions and export controls will be implemented."

Record High UK Oil Prices
(London Xinhua=Yonhap News) On the 15th (local time), gasoline and diesel prices are displayed at a Shell gas station in London, UK. Gasoline and diesel prices in the UK have continuously risen, reaching record highs last weekend. 2022.2.16
jsmoon@yna.co.kr
(End)

＜Copyright(c) Yonhap News Agency, Unauthorized reproduction and redistribution prohibited＞

The problem is that Russia may retaliate against Western sanctions by cutting off gas supplies to Europe. Europe depends on Russia for one-third of its regional natural gas supply. This makes energy supply disruptions inevitable if Russia halts gas supplies. According to the Korea Energy Economics Institute, if Russia stops supplying gas, the annual natural gas supply would decrease by 1.19 million tons, which accounts for about 30% of the global natural gas supply. The institute believes that if Russia's gas supply cut prolongs, it will be impossible to respond with only the natural gas stockpiles within Europe.

If a natural gas crisis occurs, South Korea will also find it difficult to avoid the repercussions. If supply disruptions cause international liquefied natural gas (LNG) volumes to concentrate in Europe, domestic LNG prices are likely to rise. Global LNG production facility utilization rates reached 88% last year, indicating limited additional production capacity.

The impact on international oil prices is also expected to be negative. The Korea Energy Economics Institute forecasts that if major countries begin financial and economic sanctions due to Russia's military intervention, international oil prices will form a range of $100 to $125 per barrel. In extreme cases such as a large-scale supply cut of Russian oil and gas, international oil prices could soar up to $150 per barrel, according to the institute's assessment.

An official from the Korea Energy Economics Institute said, "Global investment banks (IBs) such as JP Morgan had already set the highest international oil price this year at $125 per barrel before the Ukraine crisis," adding, "If Russia's military intervention occurs, the upward trend in energy prices will be unstoppable."

This content was produced with the assistance of AI translation services.