Friday, March 11 2022 12:11

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.