Analysis | The Global Energy Order Is Unravelling Fast: Welcome to World War E – The Washington Post

by | Oct 14, 2022 | Energy

Comment on this storyCommentGift ArticleHello and welcome  to today’s Elements, our energy and commodities newsletter. Bloomberg Opinion’s Liam Denning writes on the multiplying conflicts tearing at the fabric of the global energy order. And if you haven’t yet read the investigation by our US oil reporter Kevin Crowley into the exodus of workers at Exxon Mobil, it’s well worth a few minutes of your Friday. Finally, if you’re reading this on the web and would like to get it directly into your inbox, click here.Today’s Take: World War EIt’s October and we’ve avoided slipping into a third world war for almost eight months, so we have that going for us. Things are escalating on the energy front, though, and not just between Russia and the West.Russian President Vladimir Putin denies involvement in the Nord Stream gas pipeline explosions. Still, he claims the “precedent” means “any critically important object of transport, energy or utilities infrastructure” is now fair game. He is demonstrating that in Ukraine already, though Putin made clear nowhere should be considered safe. Even if the military war isn’t global, the energy front may be. Anyone who can remember as far back as May 2021’s Colonial Pipeline hack knows there are many ways to escalate, and miscalculate, in this vital sector.AdvertisementThings also escalated when OPEC+ announced a production cut of 2 million barrels a day. The justifications can be debated; the rift opened — or, perhaps more accurately, put on display — between Riyadh and Washington cannot. Russia’s role as Saudi Arabia’s co-lead in OPEC+ has added a potent and destabilizing element to an already strained relationship.The US itself is no stranger to using energy weapons, though usually in terms of sanctioning others’ production and distribution. Indeed, one way to look at recent escalation, transcending Ukraine itself, is an effort by Russia and Saudi Arabia to reassert their primacy in global energy.Like the manipulation of gas flows to Europe, Putin’s gossamer-veiled threat to infrastructure can be read as a reminder to the West that for all its talk of decoupling and decarbonization, it relies on the delicate fossil-fuel supply system of which Russia is a major component.AdvertisementSimilarly, while the G-7’s planned price cap is aimed at Russian oil, Saudi Arabia may wish to preempt any such oil buyers’ club, especially when so many members also sport net-zero targets. On that front, it is worth noting the Biden administration’s National Security Strategy, released this week, specifically cites the US steel and aluminum agreement with the European Union as offering a template for using “economic heft to drive decarbonization” elsewhere.The Ukraine crisis is part of a broader unraveling, with the mutual need that ties energy producers and consumers together giving way to cruder contests over who needs who.– Liam Denning, Bloomberg OpinionChart of the DayThe diesel market on both sides of the Atlantic is under stress as stretched refining capacity, winter demand and gas-to-oil switching Europe put supplies under pressure. In the key New York h …

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