The increase in fuel prices has been evident since the beginning of summer, when, due to the rising demand for resources in Asia, suppliers shifted to the region. In August, when it became clear that European gas storage facilities were not ready for the heating season, the price of fuel has begun to break records.
Despite the fact, the recent reversal in prices could be associated with Russian President Vladimir Putin’s comment about the country’s readiness to stabilize energy prices, the country’s analysts found it possible that the prices will once again climb amid a shortage of raw materials and verbal interventions by European regulators.
The Director of the Centre for Analysis of Strategy and Technologies for the Development of the Fuel and Energy Complex at the Gubkin Russian State University of Oil and Gas, Vyacheslav Mishchenko, believes that what is happening in Europe is “a man-made crisis”.
“The foundations that had been created over the previous several decades were systematically destroyed. This is a system of long-term contracts, which was based on oil index formulas for gas supplies primarily from Russia,” he stated.
According to another analyst, the specialist at Raiffeisenbank, Andrey Polishchuk, what is happening now in Europe can be called “a traders’ panic”. He claimed that from the point of view of supply and demand, the situation has changed very little, and “what we are seeing is a price hike not on the physical shipment market but on the futures market”.
In addition, the Bank of Russia has been raising its key rate since March to combat inflation. However, the rise in prices is only accelerating. In September, the annual growth in consumer prices rose from 6.7 per cent to 7.4 per cent. Meanwhile, Central Bank officials believe that this rising inflation is due to cheap loans amid too soft of a monetary policy. I
“Inflation in Russia, like in other emerging markets, is higher than in developed countries, largely due to the weakness of the economy and the significant impact of external factors. The fact is that the main reasons for the growing prices in our country are not internal,” the Chief Analyst at TeleTrade, Mark Goikhman, concluded.
Coming back to the fuel prices spike, the contract between Russia’s Gazprom and Hungary for the supply of gas bypassing Ukraine recognized the one that complies with European laws, RIA Novosti reports citing the EU High Representative for Foreign Affairs and Security Josep Borrel during the summit in Kiev.
“As far as I know, there is nothing illegal in this deal between Hungary and Gazprom, nothing that would contradict European legislation,” Borrel said.
Earlier, it became known that Russian energy giant company, Gazprom, and the Hungarian company MVM CEEnergy signed two long-term contracts for the supply of gas via the Turkish Stream and further through Serbia and through Austria, both routes bypass Ukraine. This caused Kiev’s accusation of Budapest’s decision claimed as “damaging” their relations.
However, the Russian President’s Press Secretary, Dmitry Peskov, noted that there are no taboo transit routes, so he does not violate anyone’s rights and international norms, and hardly anyone, including Ukraine, has the right to interfere in this aspect of bilateral relations.