Russia, geopolitics, and gas

Very broadly speaking, Europe's dependency upon Russian gas imports increases proportionately with proximity to its borders. So we have the Baltic States, which import 100% of their gas from Russia, Greece imports 56%, Germany 37% and the Netherlands 5%. The largest importers in aggregate terms are Germany and Italy, which constitute almost half of the EU's total demand (though the likes of France, Hungary, Czech Republic, Poland, Austria and Slovakia are all big importers, receiving over 5 billion cubic meter per year.) However, whilst Germany uses gas for just 20% of its overall energy needs, Italy uses gas to fuel almost half its power plants and is currently securing winter rates of more than EUR 2 per megawatt hour above those in northwest Europe. Italy suffered serious disruption during the previous Russian-Ukraine disputes back in 2006 and 2009 and it may yet have to look to pricey Algerian supply if the current dispute continues.

From BNY Mellon morning briefing

This is an interesting take on the geopolitical issues associated Russia and Ukraine. The gas issue is very relevant. Sanctions have been imposed but there is limit to how much risk the EU wants to impose on its economies through the cost or disruption of energy. Geopolitics often play out in commodity markets.If it were not for commodity markets, many political issues would be ignored.