Shafaq News/ Europe's shift to crude oil as cooler weather temperatures froze gas pipelines has sent the black gold benchmarks soaring, senior official at Iraq's State-owned oil marketing company, SOMO, said.
In a statement to Shafaq News Agency, SOMO's vice president, Ali Nezar, said, "due to the cold spell and the consequent freeze of gas pipelines, Europe had to shift to crude oil. This contributed to the prices surge."
"Iraq made some prompt shipments available in February because the demand will be quite high and the market's appetite for oil will grow," he said, "however, it will be under the ceiling set by OPEC+."
With its already-scant energy supplies under pressure, energy markets are likely to be hit if Russia-Ukraine tensions turn into conflict.
Europe relies on Russia for around 35% of its natural gas, mostly coming through pipelines which cross Belarus and Poland to Germany, Nord Stream 1 which goes directly to Germany, and others through Ukraine.
In 2020 volumes of gas from Russia to Europe fell after lockdowns suppressed demand and did not recover fully last year when consumption surged, helping to send prices to record highs.
As part of possible sanctions should Russia invade Ukraine, Germany has said it could halt the new Nord Stream 2 gas pipeline from Russia. The pipeline is projected to increase gas imports to Europe but also underlines its energy dependence on Moscow.
SEB commodities analyst Bjarne Schieldrop said markets would expect natural gas exports from Russia to Western Europe to be significantly reduced through both Ukraine and Belarus in the event of sanctions and for gas prices to revisit Q4 levels.
Oil markets could also be affected through curbs or disruption. Ukraine moves Russian oil to Slovakia, Hungary and the Czech Republic. Ukraine's transit of Russian crude for export to the bloc was 11.9 million metric tonnes in 2021, down from 12.3 million metric tonnes in 2020, S&P Global Platts said in a note.
JPMorgan said the tensions risked a "material spike" in oil prices and noted that a rise to $150 a barrel would reduce global GDP growth to just 0.9% annualised in the first half of the year, while more than doubling inflation to 7.2%.
