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Russia cutting off natural gas to Poland and Bulgaria could have widespread impacts

On Wednesday morning, Russian Gazprom announced they are cutting off natural gas to the two countries.

CLEVELAND — On Wednesday, Gazprom, a Russian energy company, cut off natural gas supplies to Bulgaria and Poland. While exports were halted to two countries, experts say the impacts of this action may be felt on a global level.

Steven Oluic, a retired U.S. Army officer, said that Russia may have taken these actions as a move to help bolster their own currency, as well as take retaliatory action against Poland.

“International sanctions have really been detrimental to the Russian economy. Having said that, in an attempt for Russia to maintain the stability of its currency – it has been able to do so over the last two months – it is now requiring payment for its natural gas supplies to the West in rubles,” Oluic said. “Bulgaria and Poland have refused to pay in rubles, and therefore Russia’s decided to cut off their gas supply.”

Oluic described Poland as a country that has been “vehemently anti-Russian in the whole affair,” as well as a portal for equipment supply into Ukraine, factors Oluic said he would guess factored into Russia’s decision.

While Russia has previously threatened to cut off exports to other countries, Oluic said these are the first definitive gas cut off actions Russia has taken.

“It’s going to impact the market, the natural gas market, globally,” he said. “Because as we know, just like gasoline and oil, natural gas is a commodity - global economy, traded on international markets. And with restricting their flow or ending their flow to Bulgaria and Poland, it’ll put increased pressure on gas prices.”

Seeing Russia take action, Oluic said there’s a threat now that Russia could stop exports to other countries as well. Oluic mentioned Germany as a country that, if cut off, would have particularly detrimental outcomes on a global stage.

“As we all know, Germany is the motor in the European Union and Western Europe with all things economic,” he said. “If they get cut off from gas, which I don’t know will happen or not, but it would be a catastrophe for Europe and countries that trade heavily with Europe.”   

He added that if more countries get cut off, the international economy would be hurt again, referencing issues like inflation.

“You could see an impact on the months ahead,” said Patrick De Haan, head of petroleum analysis at GasBuddy. “Natural gas and how suppliers set prices is usually months in advance, so this is something to keep an eye on for in the weeks and months ahead.”

Another possibility experts say is not off the table is Russia cutting off other exports, such as oil. Oluic said that as Russia grows its exports and relationships with China and other countries, they may be able to then reduce exports of oil to Western Europe.

“Obviously if Russia’s curbing the flow of natural gas, it could start to curb the flow of oil in the weeks and months ahead, it does escalate that situation,” De Haan said. “Of course, much of Europe is reliant on Russian oil and natural gas.”

De Haan has been watching the impact of the conflict on prices.

“For now, oil prices this morning [are] basically shrugging this off,” he said. “Natural gas prices were going up this morning on the shut down of Russia’s natural gas to these countries, but so far, oil prices have not yet necessarily been affected.”

In fact, De Haan said oil prices are down about 55 cents a barrel. However, he did say that there’s no way to determine where prices will go, given a multitude of factors that could impact the cost of oil.

“We have no idea what could transpire, a lot of the way oil moves is reactionary to what can develop from the Russia/Ukraine situation, from COVID in China, and from many other situations that could affect supply and demand,” he said.

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