Moscow Further Turns the Energy Screws on Eastern Europe

Russia has halted oil flow through the Druzhba pipeline, which takes Russian oil across Ukraine to refineries in Slovakia, the Czech Republic, and Hungary. They cut the flow five days ago.  

This is a significant move by Moscow, putting Central Europe - the rest of the EU - in an increasingly tense energy security scenario. Meteorologists are still finalizing most long-range weather assessments for 2022-2023, but early indications suggest the EU will see colder than average conditions and above-average snowfall this winter.

Notably, Hungary is a victim of the cut-off. Hungary’s Prime Minister, Victor Orbán, has long been friendly with Russian President Vladimir Putin. Putin likely sees Hungary as a weak point to be exploited in the EU’s opposition to the war and is applying greater pressure on the country to exacerbate internal EU tensions over support for the war.  

In the coming three months, markets should anticipate an escalation of Russian-influenced risk on both the energy security and food security front - particularly on the food front as Moscow is seeking to cause crises across the Middle East and Africa. We will be reporting more on this in the coming weeks.