Putin Chooses War, and the Extreme Energy Crisis That Comes With It

At least the waiting is over… well, sort of.

If you were still questioning Putin’s resolve to escalate the already tense situation in Ukraine last week, any doubt must have fled your mind after the Russian president ordered his troops into the pro-separatist regions of Donetsk and Luhansk after recognizing their independence from Ukraine. 

Perhaps the thought of Ukraine being embraced a little too warmly by the West was too much for Putin to bear. 

But hey, at least Russia’s U.N. representative reassured everyone that “allowing a new bloodbath in Donbas is something we do not intend to do.”

Wishful thinking, maybe?

It turns out that the threats and blackmail against Russia weren’t enough to deter Monday’s decision to put “peacekeeping” troops in southeastern Ukraine.

But there’s one huge problem in that strategy.

Putin is calling their bluff… and let’s not forget that he’s holding all the cards.

Well, maybe not ALL the cards, but I’ll get to that part in just a moment.

Europe’s Extreme Energy Crisis Is Just Beginning

If ever there were a catalyst for $100/bbl oil, it would certainly be any sort of invasion into Ukraine by Russian troops. 

Not only are we already dealing with a tight market, but remember that OPEC is a much weaker force without Russia as an ally. The two have been working together to help balance the market for years, and that union will be called into question when oil finally surpasses the $100/bbl threshold. 

Only the Saudis have the capacity to rival Russia’s crude output, with both nations pumping out roughly 10 million barrels per day. They also happen to be among the lucky few members in OPEC+ that even have the ability to raise oil production. 

But it’s not oil that we’re worried about today.

I’ll save that for next week. 

No, dear reader, the energy crisis facing Europe is from natural gas. 

I told you before that Putin has Europe right where he wants it. The truth is that the situation is now far worse than anyone could have imagined compared with a weeks ago.

To put a little more perspective on how dire the situation is, consider that Russia supplies around 40% of Europe’s natural gas demand.

So how could things have possibly gotten worse?

Well, one of Germany’s gambits to dissuade Russia from escalating things further was threatening to halt the Nord Stream 2 pipeline. This 750-mile gas pipeline was completed back on October 18, 2021, and is capable of transporting 55 billion cubic meters of natural gas each year to 26 million European households. 

True to its word, Germany halted certification of the Nord Stream 2 after Putin sent his troops into Ukraine. 

You have to ask, “Who really has whom in a corner now?”

Like I said, Putin doesn’t need Germany as much as it needs him.

If you want to see just how chilling it can get, look no further than a tweet from Dmitry Medvedev, the deputy chair of Russia’s Security Council:

Europe’s gas crisis extends well beyond the pipelines that carry Russia’s natural gas. Russia accounts for around 20% of Europe’s supply of liquefied natural gas (LNG). 

In fact, 70% of Europe’s LNG comes from just three places: Russia, Qatar, and the United States.

Yesterday, Qatar’s energy minister reminded the world that no single country can replace that kind of volume and that most LNG is tied to long-term contracts. 

Let’s also throw low gas storage levels into the equation as well as the fact that countries like Germany have been shuttering both coal and nuclear power. 

Now we have a perfect storm for an extreme energy crisis. 

If you think all hope is lost, at least there’s some good news. You see, not all gas sources are as reliable as you might think. Qatar’s LNG flows were hit hard last week from an unplanned outage, which could last for several more weeks. 

That provides premium LNG players in the U.S. with a huge window of opportunity. Global LNG demand is hitting record highs every year, and the U.S. is projected to take care of nearly one-quarter of that demand in 2022, outpacing both Australia and Qatar. 

There’s a reason why the U.S. is expected to become the world’s largest LNG exporter in 2022, and there’s still a strong upside for the right plays. 

It might just be the game-changer you’re looking for.

Until next time,

Keith Kohl

Check us out on YouTube!

A true insider in the technology and energy markets, Keith’s research has helped everyday investors capitalize from the rapid adoption of new technology trends and energy transitions. Keith connects with hundreds of thousands of readers as the Managing Editor of Energy & Capital, as well as the investment director of Angel Publishing’s Energy Investor and Technology and Opportunity.

For nearly two decades, Keith has been providing in-depth coverage of the hottest investment trends before they go mainstream — from the shale oil and gas boom in the United States to the red-hot EV revolution currently underway. Keith and his readers have banked hundreds of winning trades on the 5G rollout and on key advancements in robotics and AI technology.

Keith’s keen trading acumen and investment research also extend all the way into the complex biotech sector, where he and his readers take advantage of the newest and most groundbreaking medical therapies being developed by nearly 1,000 biotech companies. His network includes hundreds of experts, from M.D.s and Ph.D.s to lab scientists grinding out the latest medical technology and treatments. You can join his vast investment community and target the most profitable biotech stocks in Keith’s Topline Trader advisory newsletter.