The Strategist

IEA: Ukraine conflict may seriously affect energy security

03/02/2022 - 02:33

According to the International Energy Agency, the military operation in Ukraine has not yet resulted in a global oil and gas market catastrophe, but it could have a significant impact on energy security.

Russia is the world's top oil exporter, according to the report. In November 2021, OECD European countries (mainly of the EU, the UK, Switzerland, Norway, and Turkey) received 60 percent of Russian supplies (4.5 million bpd), with China providing the remaining 20%.

The most significant risk, according to the IEA, is oil transit via Ukraine (250,000 bpd) via the southern branch of the Druzhba pipeline for delivery to Hungary, Slovakia, and the Czech Republic. So far, none of these supplies have been disrupted as a result of recent events.

The International Energy Agency (IEA) stated earlier that its member countries had decided to release 60 million barrels of oil from their reserves to help stabilize the market. The decision, according to the agency, will prevent shortages due to diminishing commercial reserves, increased price volatility, and the situation in Ukraine.

In terms of gas, the IEA observes in its report that the EU and the UK have become increasingly reliant on Russian supply over the last decade. This is due to a significant drop in local production in these countries. The proportion of Russian gas supply has increased from 25% in 2009 to 32% in 2021.