Energy Security is a “Critical Issue” in Europe, Goldman Sachs Warns

Ukraine is at the moment the scene for the next crisis with mainstream media focusing on current events leaving people paralyzed. Having said that, investors need to think especially in such times when global stock markets or crypto markets are heading for a correction since the beginning of the year.

Since the crisis worsened with the entry of Russian troops into Ukraine, one could see that especially safe havens like gold were in high demand. In addition, one will have to expect rising energy prices, since Russia accounts for a significant share of global crude oil supplies (approx. 9%). Europe is largely dependent on Russian energy products, especially natural gas, coal, and crude oil. Russia is also a major supplier of corn, wheat, aluminum, palladium, and platinum.

In terms of energy, many people in Europe are concerned. In recent years, Europe has made many investments in so-called “green energies” and has painfully experienced its disadvantages. The energy prices with unreliable energy sources have risen sharply in recent years. If energy products from Russia were to disappear overnight, Europe would not have enough reliable alternatives. This would mean further price increases.

Peter Oppenheimer, chief global equity strategist at Goldman Sachs said in an interview with Bloomberg that “[…] one of the critical issues for Europe, of course, is energy security. Europe has been ahead globally in terms of its focus on decarbonization and ramping up investment in things like renewables. I think this adds a new degree of urgency to that program because that is what Europe is going to have to really agree on in order to become more independent in terms of its sources of energy.”

Even though Russia has announced that it will continue to supply Europe with gas, Europe will probably also have to look for other sources. LNG imports from the U.S. could be the first start, but coal and crude oil also remain an issue. Particularly as long as no comparable energy sources are available.

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