According to The Economist, the ban on Russian gas and oil is considered ineffective as it still allows the Russian economy to get revenues from energy exports. The article states that “embargoes will not drain Russia’s treasury.” The early fall of 2022 was warm which made people think that the energy crisis was over. However, despite the fact that European countries managed to build their gas reserves up to the required levels, cold winter may wreck all hopes for a soft landing. The article says that cold weather is likely to bring even more pain to the energy market. Meanwhile, modelers at Rystad Energy, a consultancy firm, have simulated three scenarios to understand how the energy crisis might develop. According to Rystad Energy, the crisis will harm the European economy. Meanwhile, Russia may find ways to resist the imposed sanctions. The first scenario assumes an embargo on Russian crude and local insurance firms will be prohibited from covering vessels carrying Russian oil. As a result, Europe may face a shortage of 84 billion cubic meters of Russian gas, equivalent to 17% of its normal annual consumption. The second scenario is called “escalation.” It suggests that Russia shuts down its gas pipeline through Ukraine and halts LNG exports. The third scenario is the worst-case one. It assumes that Russia cuts gas supplies through the TurkStream pipeline and stops gas flows through Norway’s two largest pipelines, depriving Europe of another 70 billion cubic meters in yearly supply.
