Temporary “price shock” for oil and gas in event of Russian invasion of Ukraine – ifo head
Clean Energy Wire
An invasion of Ukraine by Russian forces could lead to a “price shock” for oil and gas, the president of the Germany's Institute for Economic Research (ifo), Clemens Fuest, has warned. “Even if the supply of gas isn’t restricted, there would still be a price shock, at least temporarily,” said Fuest. This will affect private households and industry in Germany in equal measure, he added. “Currently, we are forecasting an inflation rate of four percent for 2022. If war breaks out, it could be even higher.” Fuest said it was “unlikely” Russia would cut off the supply of gas, as it depends on the revenues from sales.
Germany and Europe are still heavily dependent on Russia for fossil fuel imports. Russia was the main supplier of oil, gas and coal from outside the EU in 2020. Much of the gas consumed in Germany is bought through long-term contracts, which prices fixed months and years ahead. However, the impact of a crisis on the price of short-term deliveries can be substantial.