ArmInfo. The situation in the international energy markets resultant from the war in Ukraine will not have any effect on the price of the Russian gas supplied to Armenia, primarily due to the fact that Armenia is purchasing gas on a contract basis rather than as spot purchase.
On the other hand, it is spot markets that are a risk group now, Vahe Davtyan, Director of the Energy Security Institute, said in an interview with ArmInfo.
"We see the gas price rising worldwide. This process started before the Ukraine conflict and affected our market, the USA and Europe. In addition, political processes and information flows. All these factors are causing a rise in the gas price. In this context, we should realize that the gas price has risen in Europe due to the market situation rather than because of Russia's decision. The price of exchange futures is rising because of the market shock caused by the war and sanctions," Mr Davtyan said.
European countries are seeking an alternative to Russian gas, which is not an easy task. Developing their own gas fields is an optimal alternative for countries. However, the Netherlands, for example, has raised objections to increasing gas production, pleading environmental and seismic risks. Nevertheless, Mr Davtyan sees preconditions for Europe abandoning its environmental policy of recent decades.
Should the ongoing political processes develop, a further rise in energy prices should be expected. Given the correlation between the gas and oil prices, International Energy Agency experts are forecasting a rise in oil prices up to $190 per barrel. Should it happen, it is sure to affect gas prices in case of further hostilities in Ukraine accompanied by the "sanction warfare" between the West and Russia, Mr Davtyan said.
As regards a possibility of further rise in the prices for oil products in Armenia, the expert points out the continuing fall in the petrol and diesel fuel prices in Russia. According to him, the reason is Russia's reduced export potential because of the international sanctions, particularly the embargo on the Russian oil supplies to the USA announced by President Joe Biden. The surplus on Russia's market causes a reduction is prices for oil products.
"Given the fact that Russia's share in Armenia's diesel fuel imports is 90%, I do not rule out that the downward trends in prices could have their effect on our country as well. However, it is only in theory, as Armenia's oil market, which is still applying the 'cartel agreement' principle, is unpredictable, showing illogical trends in conflict with the real international situation. So I do not rule out that our oil traders can jack up their prices cashing in on the uncertain situation on the international markets," the expert said.
