Ukraine Blames Russian "Blackmail" For Europe Fuel Prices Hitting All-Time High

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by Tyler Durden
Friday, Jul 02, 2021 - 04:15 AM

Fuel prices in Ukraine have reached their highest levels in well over a decade, and Kiev is lashing out at Russia for "blackmail" - as the Kremlin has refused to supply additional gas to Europe amid the crisis. "Energy inflation is gathering pace in Europe, with the price of everything from gas to electricity surging to records, fueling concerns about costs to consumers as the world emerges from the global pandemic," Bloomberg observes. "European natural gas, coal and power prices climbed to an all-time high on Thursday, as did the cost of pollution permits," also amid a post-pandemic massive leap in energy demand.

The chief of Ukraine's state-backed gas pipeline company has denounced what he says is "an artificially created problem" orchestrated by Russian energy gian Gazprom. CEO of Ukraine’s Gas Transmission System Operator Sergiy Makogon was cited in FT as saying Europe "should not continue this blackmail by Gazprom with prices."

Via Gazprom

Gazprom has yet to specifically respond to these latest allegations, which also come amid tensions over the nearly completed Nord Stream 2 Russia-to-Germany pipeline which Washington has sought to halt through a series of controversial sanctions measures, albeit Biden recently dropped sanctions on the German side of the project. Russian officials have pointed out, however, that the state energy giant has fulfilled all its long term contracts in Europe.

It's long been an official US position that the entire NS2 enterprise is geared toward "punishing" Ukraine by denying it lucrative and much-needed natural gas transit fees, further as part of a broader geopolitical strategy of gaining energy-dependence leverage over Europe.

However, the latest FT reporting includes this key admission from an unnamed EU source:

An EU official said the commission "had no indications of specific behavior by any of our suppliers to drive up prices."

"The current situation is a reflection of the dynamics of the global market. All EU regions now have access to more than one gas source, making them less vulnerable to supply restrictions from an individual supplier," the official said.

Below: Share of Russian gas transit through Ukraine of total Russian gas transit from 1991 to 2020

You will find more infographics at Statista

This appears to cut against the entirety of Kiev and Washington's argument - or perhaps the question of European "vulnerability" will be tested precisely once NS2 comes online, which is said to be over 95% complete.