World Weekly丨Will the oil war behind the Russia-Ukraine conflict trigger a global economic recession?
Tensions between Russia and Ukraine are still continuing, and international crude oil prices have reached new highs. At the same time, Western countries' sanctions against Russia are extending from a financial war to an oil war.
At the NATO summit, energy issues are at the top of the agenda.
On March 24, at a special NATO summit in Brussels, the Belgian capital, Belgian Prime Minister De Crowe said that the EU will not cut off oil and gas imports from Russia.
Belgian Prime Minister De Croix: "Sanctions must deter Russia more than the European side. We cannot live with ourselves. We will not impose sanctions and make ourselves unnecessary sacrifices."
European countries such as Germany, Austria and the Netherlands also said they would not consider energy sanctions against Russia.
The Associated Press bluntly stated that the biggest disagreement at the summit was the position of Western countries on energy issues.
On March 23, the price of North Sea Brent crude oil exceeded the $120 per barrel mark.
With Russia and Ukraine officially at war, the price of Brent crude topped $100 a barrel for the first time in nearly seven years.
In the meantime, with the launch of multiple rounds of negotiations between Russia and Ukraine, although oil prices fluctuated in the short term, with the Western sanctions on Russia, oil prices eventually returned to historical highs.
Crude oil prices could top $150 a barrel this summer, a record, predicted Racock, co-head of oil at global commodities trader Trafigura.
Reuters believes that an oil crisis is underway.
US President Biden: "Defending freedom has a price, and we (Americans) have to pay too."
On March 8, US President Biden signed an executive order at the White House, announcing that the United States will completely ban the import of Russian energy.
On the same day that Biden announced the ban on Russian oil, the national average gasoline price rose to $4.34 a gallon, double the price before the outbreak.
CNN anchor: "If your car's gas tank is 15 gallons (about 60 liters) capacity. It costs $65 to fill up a tank, and over a year, even if you only fill up once a week, it will cost you more than $3,300 a year. That's $1,700 more than a year ago."
Wall Street Journal financial reporter Michelle: "It's not just gasoline that's going up, it's having a huge impact on all U.S. prices."
American media news commentator Ramsay: "The cruel thing is that (price increases) are the hardest hit people in the epidemic. Restaurant waiters, hotel cleaners, security guards, construction workers, these people have been hit by the 'double hit'. ', they have just been hit by the epidemic, and they have been hit by 'Biden inflation'. Oil prices are 100% Biden's fault and 100% Biden's responsibility."
The latest poll released by Reuters on the 23rd showed that Biden's approval rating has hit a new low due to the unsatisfactory economic report card.
According to data from the U.S. Bureau of Labor Statistics, the starting point of the U.S. CPI consumer price index coincides perfectly with the timing of Biden's entry into the White House, and it has been rising all the way.
In the White House rhetoric, however, Putin is to blame for all the price increases.
US President Joe Biden: "This is largely Vladimir Putin's fault, and it has nothing to do with US governance plans."
Biden's defense immediately drew criticism.
Even former President Barack Obama's senior adviser Ratner tweeted: "This is Biden inflation, he should admit."
McConnell, the No. 1 Republican figure in the United States, is even more precise.
He said that the Biden administration's negative policies on fossil fuels and local energy companies have led to inflationary results, and the reckless "spending money" by Democrats has accelerated inflation.
In the 1970s, the dollar was pegged to oil.
Ended the "gold standard" and freed the Western world from the oil crisis.
The "petrodollar" also helped America prosper.
Today, the international monetary system centered on the "petrodollar" has hurt the whole world because the United States continues to promote international tensions to "cut the leeks".
On the one hand, oil prices have skyrocketed, forcing the dollar to become a "hard currency".
On the other hand, the U.S. Congress and state governments are “spending money” round after round.
Most of the dollars go to banks or the stock market, not the consumer market, which keeps injecting inflation around the world and undermining the economic recovery.
Recently, stickers like this have quietly appeared at gas stations large and small in the United States.
The stickers are shoveled back and forth like snowflakes, but they upset the gas station owner.
Gas station manager: "Joe Biden doesn't care about the gas station, there's no way he could come here to fill up and see these stickers and say, 'Oh my God, it's time to take care of the gas today.'"
According to the "Daily Mail" report, in order to convince more American people that "Putin caused the price increase", the White House Press Office recently invited more than 30 Douyin Internet celebrities to help fight the public opinion war.
Among them, Internet celebrity blogger Ellie Zeller, who has more than 10 million followers, uploaded the video after visiting the White House.
Internet celebrity blogger Zeller: "Why are oil prices so high? Why is inflation in the United States at its highest level in 40 years? I had a chance to ask the White House about this, why is a gallon of gasoline now $7? They are like this Speaking of....Russia is one of the three countries with the largest oil production in the world, and oil is their primary source of income. When Putin provoked the Russian-Ukrainian war, no one in the world wanted to buy his Oil."
In fact, even if freedom is not free, as Biden said, the price the United States has to pay is really low.
Compared with EU countries, the United States is less dependent on Russia for oil.
About 35% of the U.S. oil is imported, and among them, the proportion of crude oil imported from Russia only accounts for about 3% of all overseas imports.
By contrast, EU countries depend on Russia for about a third of their oil, 40% of their natural gas and half their coal.
Earlier, Putin has made it clear that if the EU countries reject Russian oil, then Russia will cut off the natural gas delivered to the EU countries.
According to the Associated Press, about 90 percent of the natural gas the EU imports from Russia is used to heat homes and run industrial businesses.
Within the EU, countries are also divided over Russia's energy.
Among them, about half of the natural gas depends on Russia. Germany, Belgium, the Netherlands and other countries have a clear opposition to giving up Russian energy. In contrast, the Baltic countries, which are relatively less dependent on Russian energy, appear to be very hard on Russia.
On the 22nd, Latvian Foreign Minister Lance Burgess even shouted to the EU on Twitter, asking some Western Europe to unplug Russia's energy plug as soon as possible.
On the same day, German Chancellor Scholz said he would not consider boycotting Russian energy.
German Chancellor Scholz: "On March 22, Germany's position on the (energy boycott) issue remained unchanged, as did many other member states that are very dependent on coal, gas and oil, and they are more dependent than Germany, in The EU must stand together on energy issues.”
Earlier this month, the European Commission proposed at the Strasbourg summit that it plans to cut gas imports from Russia by two-thirds this year, but the plan requires the unanimous agreement of the EU's 27 member states to take effect. As of this week, the EU The country has yet to reach a consensus on this.
German Chancellor Scholz: "It is true that we will end our dependence on Russian energy as soon as possible. But if hasty measures are taken, the economy of Germany and of Europe as a whole will fall into recession, hundreds of thousands of jobs will be lost, and the entire industrial sector will be in turmoil. in danger."
Despite the obvious differences within the EU, the United States has been unable to resist selling its own natural gas to Europe.
On the 25th, the United States and the European Union signed an agreement to try to sell at least 15 billion cubic meters of liquefied natural gas (LNG) to Europe this year.
According to the data, 40% of the natural gas and 25% of the crude oil required by the EU need to be imported from Russia.
Reuters believes that the EU's dependence on Russian energy means whether it can implement an energy embargo like the United States.
Hungarian Prime Minister Orban: "On March 25, considering that 85% of Hungary's natural gas and more than 60% of its oil come from Russia, the sanctions mean that the Hungarian economy will slow down and soon come to a standstill, which is unacceptable, it is not It's in Hungary's interest. That means we're actually paying for the war."
Shortly after Biden's agreement was signed, the New York Times published an article titled "Why the United States Can't Make the EU Quickly Give Up Russian Gas", analysing that the U.S. plan to export more natural gas to the EU will be due to lack of The import and export terminal is blocked.
Natural gas, unlike crude oil, is not easily loaded onto ocean-going ships.
Natural gas must first be cooled in an expensive process at the export terminal.
The liquefied natural gas is then injected into specialized tankers.
When the vessel reaches its destination, the reverse operation is performed to convert the LNG into natural gas.
According to The New York Times, a large import or export terminal can cost more than $1 billion to build, and it will take years to plan, obtain permits and complete construction.
Almost all of the existing 28 terminals in Europe are concentrated in southern Europe for receiving LNG from the Middle East.
In Germany, Italy, Belgium, Poland and other countries, about 10 import terminals are under construction or in the planning stage, but most of them are still unfunded.
At present, Germany, which needs natural gas most urgently, has not yet built an import terminal.
In addition, according to the BBC, Russia sends about 200 billion cubic meters of natural gas to Europe each year, while the United States will only deliver 22 billion cubic meters of gas to Europe in 2021, even with the new 15 billion cubic meter quota In place during the year, it is still far from meeting European needs.
Just one day before the start of the "EU Summit", on the 23rd, Russian President Vladimir Putin announced that Russia will only accept rubles for gas transactions with "unfriendly countries".
Soon, the price of natural gas in Europe soared 34% to 132.74 euros per megawatt hour.
However, compared to "looking for gas", the problem facing the entire Western world is where to "find oil".
Al Jazeera noted that this month, British Prime Minister Johnson, Japanese Foreign Minister Lin Fang, and German Deputy Chancellor Harbeck successively visited the Gulf countries to "seek oil", but all "returned empty-handed".
On the 17th, the British Prime Minister's Office said that in a meeting with the crown prince of Abu Dhabi, Johnson stressed the need for joint efforts to stabilize global energy markets.
The two also signed a memorandum of understanding on the establishment of an intergovernmental strategic partnership committee.
However, when asked by reporters whether Saudi Arabia will increase oil production, Johnson told reporters that you are asking the wrong person.
UK PM Johnson: "I think you need to ask the Saudis that question, but I think the consensus is that the global oil and gas markets need to be guaranteed. Intervene and avoid price spikes."
In addition to the UK stepping up its search for oil, according to Reuters, the Biden administration has even recently found an old foe-Venezuela.
The United States has pledged to ease sanctions on Venezuela on condition that Maduro export oil to the United States immediately.
But talks have not progressed, according to a White House source familiar with the matter.
On the 3rd of this month, Jalina Porter, a spokeswoman for the US State Department, said: "It is close to reaching a possible new nuclear deal with Iran in exchange for Iran's increased crude oil supply."
Despite the efforts of the West to "find oil", according to Kovalin, head of energy research at Goldman Sachs Group, even if these efforts can cause short-term fluctuations in international crude oil prices, due to "structural shortages", oil prices will generally maintain an upward trend in the future. .
CNBC News Anchor: "Can Saudi Arabia get involved and help the US, Europe, the West meet the (oil) demand that is being lost from Russia?"
Kovalin, head of energy research at Goldman Sachs Group: "First of all, OPEC's decision has to be unanimous, within the group (OPEC+) there is Russia, there is Iran, there is Venezuela, and they see leverage in high oil prices, which makes unanimous decisions. It is difficult to produce.”
On February 20, at the energy conference held in Riyadh, Saudi Arabia, the energy ministers of Saudi Arabia, the United Arab Emirates, Iraq and other OPEC countries all expressed their rejection of the increase.
Iraqi Oil Minister Abdul-Jabbar said in an interview this month that OPEC+ members would be united for the benefit of the entire energy market.
Iraqi Oil Minister Abdul-Jabbar: “There is no real shortage (of international crude oil), the volatility in prices is due to geopolitical factors and we will make up for that. We will try to make the market more balanced, I mean It is the market that is more balanced and benefits OPEC members and avoids internal conflict. We don’t want to see high oil prices, but we don’t want to see low oil prices, we try to find a balance in the market.”
In the view of The Economist, as an oil exporter, OPEC prefers to keep oil prices high.
On the other hand, the increase in production under the existing technical conditions has been "more than enough". In the first three months of 2022, OPEC's plan to increase production by 400,000 barrels per day can actually only be completed halfway.
Oil demand has outpaced production growth as economies recover from the Covid-19 pandemic.
As the world's third largest oil producer, Russia is a key force in maintaining a balance between oil supply and demand.
"You can't embargo the world's second-largest supplier and expect the downside won't come," said Curry, head of commodities research at Goldman Sachs.
And this week, the global commodity index posted its biggest weekly gain since at least 1960.
Among them, the prices of metal raw materials have soared, and the prices of gold, copper, aluminum and zinc have all hit record highs on the London Metal Exchange.
Meanwhile, global wheat prices jumped to over €400/t, the highest level since the 2008 global financial crisis.
On the 24th, Macron warned at the NATO summit that the continued tension between Russia and Ukraine will trigger an "unprecedented food crisis" in the world.
In the eyes of the outside world, a decline in Russian crude oil exports may lead to a recurrence of the 1979 oil crisis.
U.S. News has reported, “In 1979, news from abroad tonight failed to bring the promise of quick relief [of the oil crisis]. President Carter and other Western leaders, in Tokyo, agreed to curb oil imports in an attempt to reduce OPEC OPEC dependence."
At the beginning of 1979, the regime of the pro-American Shah Pahlavi was overthrown by the religious leader Khomeini. At that time, Iran, the world's second largest producer of oil, stopped exporting oil, resulting in a shortage of 5 million barrels of oil per day in the oil market, accounting for about 1/1 of the world's total consumption. 10, leading to a surge in oil prices.
World crude oil prices have tripled in about a year, triggering a global recession.
Iran also suffered from the Iran-Iraq war and a series of international sanctions, and it is still in a difficult situation.
"New York Times" analysis believes that once the energy is banned, it will lead to the disintegration of Russia's economy and become the next Iran.
However, Russia's "Viewpoint" pointed out that in 2014, Russia launched the SPFS financial information transmission system for currency settlement. Even if all Russian banks are excluded from the international currency settlement system SWIFT, domestic transactions will not stop.
Throughout history, many oil crises have had a major impact on the international landscape.
The outcome of a crisis is often a rewrite of geopolitics and a new round of competition for control of oil.
O'Sullivan, a professor of international affairs at Harvard Kennedy School, pointed out that, just like the major oil crisis in the 1970s, the current oil war has the potential to bring the world back to the predicament of economic recession, and then make the current "going out" Globalization” and the fragmentation of the global order are more pronounced.
Special Report: Jia Li Yuzhuo