As Brent crude inches towards $100 mark, what does it mean for the world?

Average natural gas prices in January and February highest in the last nine years

Tensions in Ukraine are leading to a rise in oil prices. On Wednesday, prices of Brent crude hit $96 per barrel—the highest since 2014. Now, with the US threatening to impose more sanctions on Russia and countries lifting the remaining Covid-19 restrictions, the situation may get further exacerbated as the threat of war looms.

A Business Standard analysis of data shows why restrictions on Russia may further impact energy prices across the world.

While the US and Saudi Arabia account for 32 per cent of the global oil production as per International Energy Statistics, Russia comes in third, accounting for an 11 per cent share.

Even though its share in crude oil export has fallen over the years, it still accounts for over a tenth of the total global crude exports as per OPEC data. Between 2004 and 2010, Russia accounted for 12.1 per cent of global exports each year; its share between 2015 and 2020 was 11.4 per cent.

Russia ranks second in the world after OPEC countries in oil exports.

The dependence on Russian gas is much higher. Russia is the largest exporter of natural gas in the world. In 2020, it exported 199 billion cubic metres worth of gas, accounting for 16 per cent of total global natural gas exports. Its share in 2019 was even higher at 20 per cent. Although Russia’s share in natural gas exports has reduced from 30 per cent in 2000, the country produces as much gas as entire OECD European countries combined.

Moreover, Gazprom, a Russian gas company, shows that most Western European countries were dependent on natural gas from Russia.

Combining data from OPEC on demand for natural gas to just Gazprom’s exports shows that Russian exports met 51.3 per cent of German demand. The corresponding figure for France was 32 per cent. For Italy and UK, it was 29.3 per cent and 8.2 per cent, respectively.

As per Bloomberg data, the average natural gas price for the first two months of 2022 was $4.34 per MMBtu—the highest compared to the first two months in the last eight years.