War! What is it good for?
Apparently it’s good for oil, gas and petrochemical prices.
For the past few weeks concerns over Russia’s aggressive stance against Ukraine have contributed in part to the daily increase in oil, gas and ammonia prices.
Foreign Affairs Minister Dr Amery Browne said checks were made and there are currently no TT citizens in the Ukraine.
But with the conflict reaching a climax and the Kremlin posting troops in two separatist territories beyond the Ukrainian border, fuelling fears that a full-on Russian invasion is under way, the prices of oil, gas and petrochemicals like ammonia are threatening to go even higher.
This could have long-term and short-term effects for the world at large and more specifically Trinidad and Tobago as an energy and petrochemical-producing economy.
While in the short term the high price of these commodities could be beneficial, once TT is able to take advantage of them, economists and energy gurus have warned that long-term disruptions could make recovering from the medical and economic crisis of covid19 all the more difficult.
Oil prices went from negative territory in the spring of 2020 to the highest they have been in about seven years, now standing at US$92.34 a barrel (WTI) and US$96.77 a barrel (Brent). Natural gas too has seen a meteoric rise in prices now standing at US$4.48 MMBtu
Both commodities spiked last month, with crude oil (WTI) reaching US$95.41 a barrel and natural gas reaching up to US$5.53 MMBtu.
Another commodity with rising prices along with oil and natural gas is ammonia prices, which now stand at more than US$1,100 per tonne.
Russia’s threat to the Ukraine and its current breaching of Ukrainian borders have been major contributors to the prices of oil and natural gas. As it is the second largest producer of natural gas behind the US, the third largest producer of crude oil behind Saudi Arabia and the US and one of the world’s largest producers of ammonia, uncertainties coming out of conflict with Ukraine and resulting sanctions against doing business with Russia have greatly contributed to the rise in prices for the commodities.
The conflict between Russia and Ukraine has already resulted in sanctions, despite Russia's being one of the top suppliers of natural gas to Europe.
“With this latest issue with Russia, the German government has signalled that it will put a halt to the approval of the Nordstrom 2 which connects natural gas from Siberia to Germany,” said former energy minister Kevin Ramnarine.
“Russia provides Europe with 40 per cent of its gas demands. It is also one of the biggest markets for LNG. What this means is that we as a country will experience higher prices for the oil and the natural gas and ammonia that we export.
“We expect a barrage of sanctions on Russian commodities and businessmen, and what will happen out of that will be that the prices will be heading upward.”
Economist Dr Vaalmikki Arjoon added that along with the US, the UK and Japan are also set to impose sanctions on Russia.
“The
