With the intensification of conflict and unprecedented tension between Russia and the West, Gas prices in Europe rose significantly on Tuesday, especially after Germany announced the suspension of approval of the Nord Stream 2 gas project, and US officials confirmed that this line would never work.
Crude oil prices approached $100 a barrel after Moscow ordered the deployment of its forces in two separatist regions in eastern Ukraine.
oil and gas flow
However, a senior US State Department official confirmed, according to Archyde.com, that nothing of what is happening on the ground currently in Ukraine could threaten the flow of oil and gas to global markets.
He also added that the sanctions imposed by the administration of US President Joe Biden yesterday on Russia are not aimed at disrupting global energy markets, and are unlikely to cause that.
However, some economists have another opinion, as they warned that the world may witness one of the worst scenarios ever, similar to what happened during the 1970s crisis, when supplies of natural gas, oil and other raw materials were obstructed, at a time when global demand for them increased.
But what is the importance of Russia and Ukraine, and between them the Donbass region, in this regard?
Nord Stream 2
make up Nordstream Line 1 and 2 One of the modern lines under the Baltic Sea in order to transport Russian gas to Germany, after it was transported only through land lines that also pass through Ukraine and Poland.
When the former Soviet Union collapsed, Russia held one of the largest gas reserves in the world, leaving Ukraine only underground pipelines to transport gas.
But the “Nord Stream” extending from the Russian west has risen over the past years to disturb Kiev, and at the same time constitutes a major bargaining chip in the hands of the West in order to repel any possible Russian invasion of Ukraine.
The work of laying these pipes (Nord Stream 1) started in 2011 and was completed in 2012.
The construction of the Nord Stream 2 line started in 2018, and was completed last year (2021).
This project has drawn criticism from several countries in Eastern Europe in addition to the United States.
With it running, Kiev would lose the €1.8 billion “transit” fees that Moscow pays for using Ukrainian land lines to ship gas to the European Union.
The largest coal reserves
Russia and its gas constitute one of the main suppliers of gas to European countries, although the European Union has confirmed more than once with the escalation of tension with Moscow that Europe is able to search for other sources of gas!
In addition to gas, the Donbass region, which includes the breakaway regions of Lugansk and Donetsk, which Russian forces entered on Tuesday (February 22, 2022), contains one of the largest coal reserves in Ukraine.
Wheat cultivation (Archyde.com)
It was one of the most important centers of heavy industry in the former Soviet Union.
What about wheat?!
In addition to coal, the Ukrainian territory includes several natural resources of iron ore, oil, magnesium, timber, and others.
Although it does not constitute a very large percentage in terms of global exports, any vibration in any of these sources, according to economic observers, may affect the global market, which emerged some time ago from a closure crisis due to the epidemic that extended for many months, according to what was quoted by “Wall.” Street Journal” on specialized economists.
As for wheat, it is another issue that may affect many countries in the Middle East that depend on Russian wheat.
Russia is the third world exporter of wheat after China and India, and several Arab countries depend on it, including Lebanon, Syria and Sudan.
In front of this scene, the eye of economists remains on the developments of the current escalating conflict between the Kremlin and the West, amid ambiguity about the intentions of Russian President Vladimir Putin, and the extent to which he is ready to move forward with his plans against the western neighbor Ukraine.