Echoing what Zoltan Pozsar said in his latest must read note, the former executive vice president at Saudi Aramco, Sadad Al-Husseini, told CNBC on Monday that there’s not enough capacity in the world to replace Russia’s gas supply to the European Union, while Moscow has plenty of markets to sell its energy to.
“The US doesn’t have the LNG capacity to replace Russia’s exports to Europe,” he said, noting that power bills across the EU are set to soar this winter. He did not comment on China reselling Russian LNG to Europe although we expects others will soon.
According to Al-Husseini, the lack of freely available supply could lead to serious problems on the global energy market. “This situation is a new world, and it’s not a very good one for energy,” he warned.
“In any case, there isn’t enough LNG capacity in the world to make up for the Russian exports to Europe,” the former executive said, adding that, “It will take years for the EU to find resources to replace Russian supply.”
He also said that while Russia may lose Europe as an end-market, there are “plenty of alternative markets” for Russian energy, including China, Japan, or India, that eagerly flount Western sanction, realizing that the Biden admin is increasingly toothless in punishing sanctions violators.
Meanwhile, Europe does not have alternative energy sources, he said, “while the US is maxed out already, North Africa has got problems,” and OPEC is also running out of spare capacity.
“So, it’s a global problem,” he said.
The official suggested that, while the Russian economy may suffer under Western sanctions, the rest of the world will be suffering with them.
However, he stressed that “Russia may recover a lot sooner than Europe.”