A few year ago, Russia invaded Ukraine and the Russia was expecting the same response from Europe as the previous time. A slap on the wrist and then everything would be normalized. This time, the western countries said no and the war between Russia and Ukraine became a normal awful war and Europe and the US imposed sanctions on Russia. Financial assets were seized, they are helping to pay for the war, as well as shutting down oil and gas from Russia. Although the world concentrates on the Middle East as oil producing countries, Russia is one of the world’s largest producer of oil and gas and much of the economy was based on budget surpluses from the sale of the products.

Since the war, Russia has concentrated on alternatives to China and India and Europe paid the price of the sanctions. Germany and Italy were the biggest customers, and the result was oil and gas prices went from the lowest prices in Europe to some of the highest prices, with a direct effect on the economies of the countries and manufacturing costs.

In an article from Reuters, Russian oil and gas is slowly making a comeback into Europe with Deputy Prime Minister Alexander Novak said exports are up 18% from last year.

The increase admittedly is coming from a low base, when European supplies fell 55.6% to 28.3 bcm, but they are now up to 32 bcm according to Gazprom.

There are problems for the oil and gas, even though there is conflict between Russia and Ukraine, about half of Russian gas flows from Russia to Ukraine to Europe. The exports are allowed by a 5-year agreement which expires in 2024 and Ukraine said will not be renewed.

The other half goes through the TurkStream pipeline on the bed of the Black Sea.

LNG supplies have been on the rise with Europe taking half of the Russian exports. The EU said it will try to take less LNG and go to alternatives from Norway, the US and Qatar. (President Trump has said he wants more LNG supplies to go to Europe).

Linking to dividend paying stocks, geopolitics is something companies get involved in once they export and import from other countries. The best solution is always peace and stability, but the world is complicated, with every country having their own agenda and hopefully they are similar to where you have your investments. If they are, life is simpler and that is a good thing.

There are more questions than answers, till the next time – to raising questions.