- RBC commodities chief Helima Croft warned that gas disruptions from Russia would lead to an energy emergency for Europe.
- “This situation in Europe really does look like an energy emergency as we head into winter,” she said.
- International Energy Agency head Fatih Birol earlier warned that Europe should be prepared for a complete cutoff from Russian gas.
Europe is facing a potential energy crisis as Russia’s reductions in natural gas exports raise fears about future supplies, warned RBC commodities chief Helima Croft.
Energy has emerged as a key battleground since Russia invaded Ukraine. In response to Western sanctions, Moscow has reduced natural gas deliveries to Europe, which typically builds up its inventories this time of year to prepare for high demand during colder months.
“This situation in Europe really does look like an energy emergency as we head into winter,” Croft told CNBC.
She also noted that International Energy Agency chief Fatih Birol told the Financial Times earlier this week that Europe should prepare for a complete cut-off in Russian gas exports.
The warnings come as German Economy Minister Robert Habeck declared the country is now in the “alarm” phase of its gas emergency plan, signaling that businesses and households need to cut down on consumption and that the government foresees long-term risk of supply shortfalls.
Last week, Gazprom cut gas flows through the Nord Stream 1 pipeline to Germany by 60%. Russia’s state gas company said the move stemmed from the West’s withholding key turbines because of sanctions.
But while Europe braces for a difficult winter with measures to reduce energy demand, Croft said the US hasn’t taken similar steps when it comes to gasoline and efforts to lower those prices.
“Unfortunately, this does look like a market that’s going to have to be balanced by demand,” she said, noting limitations in the amount of additional gasoline oil refineries can produce.
In fact, the White House’s proposal to temporarily suspend the federal tax on gasoline would actually stimulate demand, Croft pointed out.
Instead of cutting demand, the Biden administration is leaning on the oil industry to boost supply. Energy Secretary Jennifer Granholm invited oil executives to discuss the energy crisis at White House.
“The administration is really desperate to try and get as much oil out of the ground as possible,” Croft said.