Sunday, May 17, 2020

Looming Gas Crisis Will Follow Oil Crisis and Also Hurt Russia, El Murid Says

Paul Goble

            Staunton, May 16 – The Russian Federation has suffered from the collapse of oil prices. Most have ignored the risk that that collapse will be matched in the gas sector because of the differences between the two. But, Anatoly Nemiyan, a specialist on the Middle East who blogs under the screen name El Murid, says that a gas crisis is coming and will hit Russia as well.

            Scenarios for a gas crisis “look in many ways like those of the oil one,” El Murid says. Supply has exceeded demand and will continue to after the pandemic passes for some time, and so prices are subject to significant downward pressure first for liquefied natural gas which can’t be stored and then the pipeline delivered kind (

            Russia is not a major player in the former but if prices there collapse, it is quite likely that the willingness of those who have contracts for gas delivered by pipelines, a sector in which Russia is a major player, may simply walk away from these deals if the costs of meeting them far exceed what operators can then sell the Russian gas they receive to others.

            Lacking a cartel like OPEC, the gas market is likely to be subject to even more dramatic price shocks if demand continues to fall while supply remains high as those who produce gas seek to maintain their incomes by selling more. Thus, the looming gas crisis won’t start with Russia in the way the oil crisis did, but it will hit Russia ultimately and hard.

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