The energy market in Europe has been going through radical changes over the last 12 months. Global headwinds such as trade wars, oil price wars, sanctions etc have brought in new suppliers and squeezed old ones out of the market. Besides, the COVID-19 pandemic is the Black Swan that emerged from nowhere.
Amid this whirlpool, EU consumers have reviewed traditional chains of energy supplies. Russia used to be the key exporter to the European oil and gas market. However, Russia has been losing its leadership, giving in to US shale producers which are newcomers in the market. Their trial deliveries were followed by regular shipments of liquefied natural gas (LNG) and later shale oil. In July, the US increased its LNG exports to the European market outpacing time-tested suppliers, for example, Russian oil companies with their Urals export grade. Russia has been losing its market share in the EU on the back of smart pricing and marketing policies of US energy companies, well-arranged logistic chains, economic sanctions, and increasing political pressure. As a result, US oil exports were 600,000 tons up at 3.1 million tons in July from June. At present, Russia is not able to retaliate efficiently as it has to comply with OPEC+ pact on oil production cuts. Therefore, Russian oil exports have been ebbing away since May. Now they are at the lowest levels over the last 20 years.
“Local export grades have been weighed down by American oil. As crude oil is trading lower, Russian exporters have to slash delivery volumes. Traders are unnerved being forced to pay a premium on futures contracts. Meanwhile, oil exports are fading and fading,” someone trading Urals complains about troubles of Russian drillers.
