Warmer-than-expected winter shrinking Putin’s war chest
Breanne Deppisch
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Warmer-than-expected temperatures in Europe have reduced energy demand across the continent this winter, cutting into Russian President Vladimir Putin’s war chest and allowing countries to conserve natural gas and even begin refilling gas storage tanks ahead of next winter.
At least 15 European countries have reported their warmest January weather in more than a decade, including Germany, Poland, and the Czech Republic, baffling meteorologists, who have reported conditions more akin to spring than the height of winter.
The January warmth comes after Europe saw its second-warmest year ever recorded in 2022, according to a new report from EU climate scientists.
“Winters are becoming warmer in Europe as a result of global temperatures increasing,” Freja Vamborg, a climate scientist at the European Union’s Copernicus Climate Change Service, or C3S, told reporters last week.
The warm weather has disrupted operations at popular ski resorts across Europe, forcing some resorts to partially close operations or rely on 100% fake snow for weeks at a time. Others have gotten creative — opening their ski slopes and chair lifts to mountain bikers or hikers instead.
And Switzerland, which saw New Year’s Day temperatures rise as high as 69 degrees, put out a pollen advisory this month to warn allergy sufferers about early-blooming plants and flowers.
The mild conditions have sent gas prices in Europe plummeting to levels not seen since before Russia’s invasion of Ukraine.
Gas storage in the EU currently stands at about 82%, roughly double the level that leaders had targeted for this time of year, putting the bloc in a stronger-than-anticipated position and reducing its demand for liquefied natural gas and making a gas shortage increasingly unlikely for the 2022-2023 winter season.
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The warm weather also comes as Russia has struggled to find a new home for its oil supplies following the EU’s ban on crude oil imports and the G-7-backed oil price cap, which came into force Dec. 5.
Prior to the war, the EU imported roughly half of Russian oil exports, and the bloc continued to import at least some oil in the months following Russia’s invasion, reducing Moscow’s revenue when the sanctions took effect.
Uncertainty surrounding implementation of the G-7 oil price cap also caused buyers in India, China, and Turkey to reduce their volumes through early January.
Demand from China also remains weaker than expected as the country battles with a resurgence of COVID-19 cases that have curtailed its planned economic reopening.
The combination of factors has put Russia in direct competition with other major suppliers, including countries in the Middle East.
Earlier this month, Saudi Arabia slashed its prices for all of its crude types being sent to Asia in February, offering its flagship Arab Light crude for a discount of $1.45 less than average monthly prices, the lowest point since November 2021.
This could make Russia a decidedly less attractive option for China. According to a recent note from Energy Intelligence, China’s appetite for Russian crude could decline in the coming months, especially if it has competitively priced alternatives from the Middle East.
Add to that that Russia’s Ural-grade crude, its primary oil export, is currently trading around $50 per barrel, down to a two-year low.
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And things could get worse in the coming weeks. BBS Express analyst Vasily Karpunin told Reuters on Monday that there is a risk Russia’s energy export revenue will drop even further next month after the EU’s ban on Russian petroleum products takes effect.