Thread by @anasalhajji

Thread on the effects of the #Russia's invasion of #Ukraine on global energy markets
1- Will oil prices continue to rise? Will they remain high? Will they decline? The answer depends on the types of additional sanctions that might be imposed in the coming g days by the US & EU.

2- This raises another question: what can the Biden's & EU governments do? The answer consists of two parts. The first relates to the ineffectiveness of sanctions. The second relates to the dependence of the US & Europe on Russian energy sources & other materials such as pig iron

3- The main objective of economic sanctions is to force the opponent to change his/her position on something. The academic literature shows that sanctions in the last 120, although painful, failed to achieve their “declared” goals. #OOTT #Russia

4- Studies also show that sanctions affected both parties, the targeted & the imposer, negatively. Yet, countries continued to impose sanctions for their “symbolic” values while targeted countries were able to withstand the pain because of “nationalism” #Oil

5- Will the US and Europe's dependence on oil & gas imports make sanctions limited in scope & impact? Yes, that is exactly what we have seen so far. No efforts to force Russia out of the international payment system “SWIFT”, and no sanctions that affect oil and gas supplies.

6- The American iron and steel industry depends on imports of pig iron from Russia. Will the Biden administration stop these imports, which will result in a slowdown in US plants and possibly layoffs of workers whom Biden needs in the November elections?

7- Notice the following: the impact of all sanctions imposed so far, or might be imposed, is not immediate, but the impact of retaliation of Putin to these sanctions is immediate: halt of natural gas exports & cyber-attacks. #Oil #Russia #Ukraine

8- It all boils down to finger biting: who is going to scream first. Given what was mentioned in #7 above and the forthcoming elections, it is clear that Europeans and the Biden Administration will scream first. #Biden #Putin

9- Why is the Biden administration fighting the #NordStream2 pipeline?
a- To keep #Ukraine relevant to #Europe so Europe can defend it in the future
b- To carve a permanent market share for the US #LNG in Europe

10- 9-a above might lead Russian forces or their operatives to permanently destroy parts of the Ukraine gas pipeline that link Ukraine to Europe. Otherwise, installing a friendly regime will save the pipeline. 9-b is not sustainable in the long run. Europe needs Nord Stream II

11- What are Putin's options if tough sanctions are imposed on Russia?
If forthcoming sanctions are severe & reduce Russia’s ability to sell its oil in Europe, #Russia can switch some of its exports to the East.
Regardless, the world oil trade will be shuffled & oil redacted.

12- If Russia is expelled from the SWIFT system, it can export oil & gas but cannot get paid. Russia can resort to its agreements with Turkey, Iran, and Russia to trade directly in local currencies. Russian mafia will work its magic throughout the world to funnel cash to Moscow.

13- Expelling Russia from the SWIFT system will force it to develop a non-dollar system with the help of China, Turkey, and Iran. A serious problem for the US. They cannot price oil and gas in non-dollar currency, but they can get revenues in non-dollar currencies. #Dollar

14- Putin's retaliation will be severe. He has two powerful options:
a- Halt natural gas exports to some European countries (reminder, it is still winter).

b- Conduct cyber-attacks on major energy infrastructure, banks, and government services in the EU & US. #Russia #OOTT

15- The chilling impact of the Russian-Ukrainian crisis (1): Lower oil production in some oil-producing countries because of demonstrations & political instability as a reaction to higher fuel and food prices. Russia and Ukraine are major exporters of grains & foodstuff.

16- Remember this: wars and political stability in oil-producing countries happen only during high-oil prices. They have never happened in periods of low oil prices. Food & fuel shortages and higher prices are serious matters in some oil-producing countries.

17- The chilling impact of the Russian-Ukrainian crisis (2): The slowing down of carbon normality policies as subsidies for food & fuel compete with subsidies for renewable energy & #ElectricVehicles. Elections matter. Food and fuel are common denominators among most populations

18- What we have seen in recent weeks is strange: countries are ignoring market reform & climate change policies by lowering taxes on fuel & providing fuel subsidies. These policies increase demand for oil, leading to even higher oil prices & higher emissions. #Oil #OOTT

19- To conclude: even if Russian oil exports do not decline, the impact of food & fuel shortages & higher prices might reduce oil exports in some oil-producing countries. The slowing down of climate change policies will also increase the demand for oil! @ericnuttall #Russia #Oil

20- March 7
A Vietnam moment is developing… we are just one picture away from the public in the West asking for NATO involvement in the war.

To counter it, We are also one announcement away for Syria moment when a major opposition announced its allegiance to Al Qa’eda

21- Under the above scenarios, OPEC+ will lose the driver’s seat… a repeat of what happened in 2008 is in order…with oil prices goofing through the roof.. but this time is different: high oil prices come with global chaos…

22- only global recession that hits soon will prevent the scenario mentioned above.