A year has passed since Russia invaded Ukraine, taking a devastating toll on the nation and its people, and jolting global energy markets already affected by severe disruptions.

Only a few days after the invasion, Rystad Energy assessed the probable market implications: Russian oil exports would immediately plummet by at least 1 million barrels per day, sending Brent to $130 per barrel, while the volumes of Russian gas that had been exported to Europe in 2021 could be replaced by a combination of additional LNG imports (covering approximately 50% of the shortfall) and increased gas production from within Europe, coupled with 10% demand destruction.

These scenarios made for an acceptable forward path for Europe in terms of energy security – provided governments and companies took bold and timely action – and they did! One year later, our predictions and price expectations remain essentially the same as they were prior to the invasion.

The gas market had a softer start to 2023, helped by a mild winter in the northern hemisphere and solid storage levels of gas in Europe. Consumers have had to pay higher prices for oil, gas and power as a result of Russia’s Ukraine invasion, along with reduced nuclear and hydro generation in Europe, but OECD energy supplies have been sufficient to meet the continent’s needs. High-income countries have managed to ride out the storm, while emerging and developing nations have struggled. Moreover, the energy poverty challenge is still very real, and may even have worsened, including the negative local impact of restarting or prolonging coal-fired power production instead of gas-fired power production, as has been seen in Pakistan. 

Going forward, we see upside to oil prices through 2023, with prices quite possibly hovering above $100 per barrel, whereas gas and power prices will likely continue to trend downwards as markets adjust and balance.

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