Gaza to deepen Europe’s energy woes

21 Oct

Other than the Ukrainian people – hijacked, deceived and finally betrayed by false friends – the main loser of America’s proxy war on Russia in Ukraine is Europe. Not one of its leaders has so far broken ranks and dared to disobey Washington’s hubristic and disastrous folly. This despite a sea of evidence not only that Europe stands terminally weakened by a war that epitomises its squandering of opportunities for trade with Eurasia, but that this has been a desired outcome for the USA.

Polish MEP Radek Sikroski is married to US arch-Atlanticist and Russia hawk, Anne Applebaum

Such paralysis of leadership is unsurprising. First, neoliberalism’s inherent tendency to propel techno-managerialists to high office – what Tariq Ali called the Extreme Centre – is a recipe for timidity of the kind seen in Olaf Scholz (in thrall not only to his own mediocrity but a rudderless coalition 1 in which the warmongering ‘Greens’ punch way above their weight) … in Emmanuel Macron (his gestures, like meeting Xi without DC blessing, easily slapped down because de Gaulle he ain’t) … in Rishi Sunak (imprisoned by his party’s nutters) … and in Keir Starmer (fake opposition on so many counts I don’t know where to start).

Second, the betrayal of their own peoples to align with Washington is so thoroughgoing as to meet standard definitions of a term hitherto reserved for pliant leaders in the global south – comprador. As postcolonial leaders in Africa and Asia were groomed at Eton and Oxbridge, so are Europe’s post-1990 leaders groomed in Washington, with Ursula von der Leyen a vivid but not egregious example.

Third, even without the previous two factors, so deeply embedded is our understanding – West is Best and Washington is to West as Rome is to Catholicism – that deepening ties with an ascendant Eurasia, and the attendant Washington incandescence, would still demand a huge leap of imagination. It would require, in all probability, a crisis too glaringly visible even for our media’s lies of omission to shield from view. How else would Europe deliver leaders capable of so drastic a shift?

In my previous post I took E M Forster’s advice and only connected – in my case between the ongoing Gaza genocide, the bleeding out of Ukraine on the altar of US exceptionalism, and the impending war on China. What I didn’t expect, however, was that the centrist Al-Monitor would agree!

Only kidding. It doesn’t; not really. Yet without invoking Banquo’s ghost Nord Stream or in any other way aspiring to a perspective other than that of your humble business analyst, it does in its own way heed the plea of that Edwardian novelist.

Could Israel-Hamas war lead to another winter energy crisis for Europe?

LNG spot prices have shot up since the Israel-Hamas conflict broke out, but European inventories are at all-time highs.

The day after Hamas launched its surprise attack against Israel on Oct. 7, where scores of Israelis were killed and abducted by the Islamic militants in the south of the country, the Israeli government ordered the Tamar gas field shut down.

The field is Israel’s second largest, holding some 10 trillion cubic feet of natural gas, and is owned by Chevron, Dor Gas Exploration Limited Partnership, Everest Infrastructures, Isramco Negev 2, UAE-based Mubadala Investment and the Israeli company Tamar Petroleum. Before the shutdown, the field typically met around 70% of Israel’s power generation needs.

Israel has so far managed to backfill gas supplies from its other fields to meet domestic demand and supply international customers, but the escalated conflict and the closure of Tamar have caused jitters in the energy market, with heightened fears of a wider war involving other Middle Eastern states.

Liquified natural gas (LNG) spot prices rallied by more than 40% on Wednesday, to $18.345 per one million British thermal units (MMBtu), an eight-month high. Multiple reports suggest that some LNG buyers in North Asia have paused plans to acquire additional winter fuel as a result of Hamas’ attack and Israel’s retaliatory bombardment of Gaza.

Prices ballooned last winter amid soaring inflation and Western sanctions on Russia — formerly Europe’s largest supplier of oil and gas — due to its invasion of Ukraine in early 2022. Fortunately for many on the continent, the winter was relatively warm.

Callum Macpherson, head of commodities at Investec, explained that the structural shortage of gas for Europe due to the sanctions on Russian energy exports was much more pronounced than it was for oil, making gas prices and hence electricity prices more sensitive than oil ones. Oil flows are also much easier to redirect than gas flows.

“European gas storage is almost full, but we have a long winter ahead of us yet, and so if any supply risk emerges, we have to think what will happen if that materializes,” he told Al-Monitor. “You then also have to factor in the risk that winter turns out to be unusually cold — adding to supply pressure. In that scenario, we might see a return to the kind of price behavior that became common in 2022. If the winter is relatively mild, the high inventories mean we could see gas prices easing.”

Robin Mills, chief executive of Qamar Energy, believes the worst-case scenario could be “very bad” for Europe, but so far remains unlikely, as prices have already withstood two major wars, attacks on energy infrastructure and disruption of gas and oil supplies.

“More likely [are] some isolated attacks on tankers etc., tightened enforcement of sanctions on Iran taking a few hundred thousand barrels per day of oil off the market again, and a longer shutdown of Israeli gas supplies to Egypt, stopping its restart of LNG exports,” Mills told Al-Monitor.

Damage control and high EU inventories

European leaders are scrambling to implement damage control to prevent the conflict from escalating. British Prime Minister Rishi Sunak arrived in Israel on Thursday to meet with Prime Minister Benjamin Netanyahu, while German Chancellor Olaf Scholz paid a visit on Tuesday before heading for talks in Egypt. European Commission President Ursula von der Leyen had traveled to Israel last week …

Read the full Al-Monitor piece …

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  1. A comment below the linked Duran podcast says:

    The Germans should have voted Putin in instead of Scholtz, at least they would still have oil, affordable energy, Industry and Christian values and a respect for the family unit.

    Say what you like about that juxtaposition, a striking feature of a neoliberalism now in its fifth decade is its combining of class war austerity with social liberalism now weaponised as identity politics.

3 Replies to “Gaza to deepen Europe’s energy woes

  1. European gas storage may well be a vast improvement on the criminally low capacity levels going into last winter.

    Though to be honest I’m having a hard time squaring the optimism on gas capacity and, by implicit extension, the robustness of the gas/energy market in this part of the world which is portrayed in the Al-Monitor article with the email I received around the time I departed for Cuba in early October highlighting the initiative from the OFGEN regulator which is apparently asking UK energy consumers to contribute an extra £17.50 on top of their already huge bills to prevent the piratised energy companies from going under.

    See here:

    I suppose its an improvement on the £82 we apparently paid last year (which I did not know about until I read the above just now).

    However, what stands out in the Al-Monitor article is the complacency over oil supplies which will arise from any wider escalation of the Near East situation.

    Here’s the Cradle from two days ago which limits its analysis to Yemen and Iraq…..

    …..but says nothing about the likely impact, particularly the economic and oil logistics impact, of Iran being dragged into any wider conflict. A possibility which would very likely see key oil tanker lanes in the Gulf and possibly even the Red Sea being closed (have the North Americans – ie the US – got any carrier groups in the Indian Ocean within loitering distance?)

    Good luck trying to move stuff around – food, raw materials, people to work etc – when the refineries are running on or near empty arising from supply chain interruptions in order to carry out a re-enactment of the Warsaw Ghetto.

    I wonder how many ‘fleas” that will create?

  2. Looks like Gilbert Doctorow may have been dipping in again?:

    “Qatar has already warned Germany that it stands ready to cut off further shipments of liquefied natural gas to Europe, which would precipitate an enormous spike in prices and serious shortages of energy in Europe. How long will it be before the oil producers of the region declare an embargo on Europe for its stance relative to the blockade of Gaza and bombing of residential neighborhoods and hospitals?”

    • The question posed in Gilbert’s title is top of my mind right now. I’m gathering materials and thoughts for a post on it. Minds as diverse as Michael Hudson, Dmitry Simes, Pepe Escobar and John Helmer (thanks for sending me his latest post btw) are from their different perspectives focusing on it. Even mainstream corporate media are in their tunnel viewed way waking up to the dangers:

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