KUALA LUMPUR (Feb 23): With the outbreak of the Ukraine crisis, Europe seems to have never been closer to a self-made energy crunch which threatens its future.
In a commentary on Tuesday (Feb 22), the Global Times, an official Chinese Communist Party mouthpiece, said the US and its Western allies had condemned Russia's latest move to recognise the two breakaway regions in eastern Ukraine as independent states while pledging to impose new sanctions on Moscow.
The report said the latest development sent jitters through global financial markets, with a litany of international stock indices plunging sharply and oil prices surging on potential energy supply disruption concerns.
It said this is because if the Russia-Ukraine situation continues to escalate, it could cause severe turmoil in global energy supplies, with European countries bearing the brunt of the shocks.
The Global Times reported that European Union (EU) officials previously said that there is general agreement that economic sanctions would be ready within 48 hours of an "invasion".
It added that while it remains unclear what the EU sanctions would contain, given Russia's economic significance to Europe in terms of energy cooperation, there are loud voices calling for European sanctions to avoid disrupting important oil supplies from Russia.
The paper said any potential Western sanctioning on Russia's energy exports is likely to be double-edged sword.
It said some may argue that US gas exports to Europe had been on the rise recently, which may become a potential source of energy supply to European countries, but even if the US can increase its production capacity to fill the supply gap, the high transportation cost of liquefied natural gas from the US means that the EU's energy cost would rise significantly.
Similarly, oil has also been facing considerable pressure lately.
Once the situation worsens, it is inevitable for oil prices to go off the roof, it said.
The paper also cautioned that it is not just Russia and the EU that would be hit by the turmoil in global energy supplies caused by the geopolitical conflict.
According to the paper, once the global energy supply and demand pattern has to change, China, which relies heavily on oil and gas imports, could also feel the effect.
Historically speaking, military conflicts, especially those among major powers, often have a serious impact on oil supplies, it added.