War in Ukraine pushes oil, gas prices up as Abela promises prices stability

Brent rises above $105, highest since 2014, stoking fears of supply disruption, stockpiling, and continued rise in prices

Prime Minister Robert Abela in Brussels at the European Council meeting on Ukraine, 24 February 2022
Prime Minister Robert Abela in Brussels at the European Council meeting on Ukraine, 24 February 2022

Malta prime minister Robert Abela has said he will guarantee price stability in the face of rising prices of oil and natural gas in the wake of Russia’s invasion of Ukraine.

Abela was in Brussels on Thursday evening to discuss a raft of sanctions against Russia and President Vladimir Putin, amid a spike in the prices of commodities.

Malta’s gas supply is procured by the company that runs the Delimara power plant, whose main shareholders include Socar Trading, the international marketing arm of Azerbaijani state oil company Socar.

Two days before Russia launched its massive invasion of Ukraine, Putin signed a wide-ranging agreement with his Azerbaijani counterpart, Ilham Aliyev, deepening their diplomatic and military cooperation.

The signing of the declaration “brings our relations to the level of an alliance,” Aliyev said after the signing in Moscow. Azerbaijan – which forcefully argues for the principle of territorial integrity when it comes to its own breakaway territory of Nagorno-Karabakh – has remained silent on Moscow’s recognitions.

Commodities jump

Oil prices jumped on Thursday, with Brent rising above $105 a barrel for the first time since 2014, after Russia’s attack on Ukraine exacerbated concerns about disruptions to global energy supply.

Oil prices are soaring with news of the full-scale military incursion of Ukraine, immediately putting at risk up to 1 million barrels per day of Russian crude oil exports transitioning through Ukraine and the Black Sea.

Global benchmark Brent crude rose 6.8% to $103.45. U.S. West Texas Intermediate (WTI) crude jumped 5.2% to $96.88 – their highest since August and July 2014 respectively.

Russia is the third-largest oil producer and second-largest oil exporter. Russia is also the largest provider of natural gas to Europe, providing about 35% of its supply.

With low inventories and dwindling spare capacity, the oil market will suffer such large supply disruptions, which could lead to oil stockpiling activity, and a rise in prices as demand grows.

Britain has announced a massive package of economic sanctions on Russia, saying that the West must end its reliance on Russian oil and gas.

Neutrality and Russophobia

In Brussels, Robert Abela said there were some 70 Malta-flagged ships in Ukrainian ports, two Mata-registered airplanes in Ukraine, and a number of Maltese investors in Russia who could be impacted with a freeze on the banking system.

“We are monitoring the system to give assistance to those investors, and following the price of oil and natural gas. I gave guarantees to the Maltese people that we will have price stability.”

Abela said Malta had spoken in favour of peace in Ukraine, and that this does not compromise its constitutional neutrality.

He also said the war in Ukraine did not mean that people of Russian nationality or descendance were “bad”. “I know there are many Russians who do not approve of what happened, so we have to see this situation in its entire context. The attack breaches international law, and we will keep hoping for peace and for the two parties to sit at the same table for a peaceful end to the conflict.”

Council statement

The European Council yesterday condemned Russia’s unprovoked and unjustified military aggression against Ukraine. “Russia alone is to blame. It will pay a heavy price,” said Charles Michel, President of the European Council

The European Council demanded that Russia immediately ceases its military actions, unconditionally withdraws all forces and military equipment from Ukraine, and fully respects Ukraine's territorial integrity, sovereignty and independence.

The European Council agreed on further restrictive measures covering the financial sector, the energy and transport sectors, dual-use goods, export control and export financing, visa policy, and additional listings of Russian individuals.

The European Council condemned the involvement of Belarus in Russia’s military aggression and called for the swift preparation of  a further individual and economic sanctions package that will also cover Belarus.