Big Oil Is Turning Its Back On Russia

• Oil and gas supermajors are pulling the plug on Russian energy projects despite massive costs.
• The West has remained reluctant to sanction Russia’s energy sector, fearing a worsening energy crisis.
• Europe’s reliance on Russian natural gas to keep the lights on and the economy running has weakened the continent’s bargaining power with Putin.

As an invasion unfolds in Eastern Europe, the reverberations from heavy shelling in Ukraine are rippling across the world. As Putin’s Russia invades the sovereign country and the gears of war begin to turn, there are more questions than answers about the impact that the tragedy unfolding in Ukraine will have on the rest of Europe and the global economy. For one thing, as a critical lynchpin for the European continent’s energy security, conflict in Russia and Ukraine will have far-reaching consequences for the average resident in the European Union.

Already, the attacks have caused oil prices to soar above $100 a barrel for the first time in nearly a decade, and have also sent renewable energy stocks surging as the liquefied natural gas market takes a major hit. Russia historically provides around 40% of the European Union’s natural gas supply and approximately 50% of Germany’s. All of which is to say that the Kremlin has considerable leverage in Europe, and this codependence has created a geopolitical nightmare as Russia has ignored the West’s pleas not to enter Ukraine.

Since well before the Russian invasion of Ukraine, Europeans have been struggling under the weight of runaway energy bills. In Germany, some residents are now paying as much for one month of energy as they used to pay for an entire calendar year. In the United Kingdom, the government raised the price cap for energy bills by a whopping 54%.

And while the individual stories of financial strife, stress, and sacrifice are heartbreaking, the impact on local businesses and industries is nothing short of frightening. All kinds of small businesses across Europe have been forced to cease their operations as energy costs outweigh profits. Large industries have not been immune to sticker shock either. “Almost two-thirds of the 28,000 companies surveyed by the Association of German Chambers of Commerce and Industry this month rated energy prices as one of their biggest business risks,” the New York Times recently reported. “For those in the industrial sector, the figure was as high as 85 percent.” – READ MORE