Ukrainian President Volodymyr Zelensky's recent decision to halt Russian gas transit to Europe has raised significant concerns as it coincides with the critical winter heating season. This move is expected to exacerbate the already rising gas prices across Europe, particularly affecting Germany, which is preparing for parliamentary elections on February 23, 2025. The halt could further strain European economies, already grappling with high energy costs and dissatisfaction over U.S. suppliers profiting from gas shortages [631b3888].
By the end of 2024, Russia had positioned itself as the second largest gas supplier to the European Union, following Norway. In December 2024, Russian liquefied natural gas (LNG) deliveries to Europe reached a record 2.16 billion cubic meters, contributing to a total of 21.5 billion cubic meters imported throughout the year, an increase from 17.8 billion cubic meters in 2023 [631b3888].
The decision to halt transit is particularly impactful as Ukraine has historically received around $1 billion annually from Russia in transit fees. Maria Zakharova, spokesperson for the Russian Ministry of Foreign Affairs, has attributed the disruptions in gas supply to the United States and Ukraine, warning that these developments could have severe repercussions for the European economy and the living standards of its citizens [631b3888].
In light of the crisis, President Vladimir Putin has expressed a willingness to resume gas transit through Ukraine, suggesting that negotiations could be on the horizon. The recent visit of Slovak Prime Minister Robert Fico to Moscow may indicate a potential for renewed discussions regarding gas transit [631b3888].
Experts like Valery Andrianov have noted that while halting supplies may not lead to an immediate gas deficit, it will likely increase market instability, complicating the energy landscape in Europe [631b3888]. This situation is further complicated by the expiration of a five-year gas transit agreement between Ukraine and Gazprom on January 1, 2025, leaving both parties in a precarious position without a new deal in sight [631b3888].
As the ruble continues to struggle under international sanctions, experts warn of worsening consumer inflation in Russia, particularly affecting low-income families. Despite these challenges, the Kremlin remains optimistic, citing its relationships with BRICS nations and a reliance on gold and commodities to navigate the sanctions landscape [631b3888].
This ongoing energy crisis underscores the intricate interplay between geopolitical tensions and global energy markets, as countries grapple with the implications of sanctions and their effects on supply and pricing [631b3888].