Will Ukraine violence affect energy prices?

Geopolitical risk makes comeback

Ukraine, Venezuela and Gas Pain

The Ukraine erupts in violence and Venezuela protesters take to the streets after opposition leader Leopoldo Lopez gave himself up for arrest and vows to fight for democracy and free speech. Venezuela’s President Nicolas Maduro who lacks the gravitas of the late Hugo Chavez is blaming the opposition for inciting violence, the very problems it protests. Leopoldo Lopez is the opponent of Venezuela's socialist government was accused by President Nicolas Maduro of homicide and inciting violence. In the meantime it is becoming clear that Venezuela’s social revolution is crumbling along with its oil industry and its economy. 

For oil concerns that this violence could hurt exports the gasoline market in the United States seemed to focus on those concerns along with rising oil prices and refinery maintenance. While we are less reliant on Venezuela for imports, this comes as weather and refinery maintenance conspire to drive oil higher against a backdrop of a shaky dollar.

 

In the Ukraine the Russian leaning president is cracking down in a way that would make the old Soviets proud. Reuters is reporting that the Ukrainian President Viktor Yanukovich accused pro-European opposition leaders on Wednesday of trying to seize power by force after at least 26 people died in the worst violence since the former Soviet Republic gained independence. European Union leaders condemned what they called "the unjustified use of excessive force by the Ukrainian authorities" and said they were urgently preparing targeted sanctions against those responsible for the crackdown. 

Protesters have been occupying central Kiev for almost three months since Yanukovich spurned a far-reaching trade deal with the EU and accepted a $15-billion Russian bailout. The sprawling nation of 46 million people with an ailing economy and endemic corruption is the object of a geopolitical tug-of-war between Moscow and the West. That struggle was played out in hand-to-hand fighting through the night, lit by blazing barricades on Kiev's Independence Square, or Maidan.

 

Russian President Vladimir Putin's spokesman insisted the Kremlin was sticking to a policy of not intervening in Ukraine, although his point man has called for decisive action to crush the protests. The Kremlin said Putin and Yanukovich spoke by telephone overnight, calling the events an attempted coup. Moscow announced on Monday a resumption of stalled aid to Kiev, pledging a $2-billion cash injection hours before the crackdown began, although the money has not yet arrived and the Kremlin spokesman would not say when it would be paid.

Ukraine's hryvnia currency, flirting with its lowest levels since the global credit crunch five years ago, weakened to beyond 9 to the dollar for the second time in February after the violence. After a night of petrol bombs and gunfire on Independence Square, black smoke billowed from a burned out trade union building that protest organizers had used as a headquarters.

Security forces occupied about a third of the square - the part which lies closest to government offices and parliament - with protesters pouring in to reinforce their defenses on the remainder of a plaza they have dubbed "Euro-Maidan". In a statement posted online in the early hours, Yanukovich said he had refrained from using force since unrest began but was being pressed by "advisers" to take a harder line. "Without any mandate from the people, illegally and in breach of the constitution of Ukraine, these politicians - if I may use that term - have resorted to pogroms, arson and murder to try to seize power," the president said. He declared Thursday a day of mourning for the dead. The state security service said it had opened an investigation into illegal attempts by "individual politicians" to seize power.

A senior opposition leader, world champion boxer-turned-politician Vitaly Klitschko, walked out of a meeting with Yanukovich during the night, saying he could not negotiate while blood was being spilt.  When fighting subsided at dawn, the square resembled a battle-zone, the ground charred by Molotov cocktails. Helmeted young activists used pickaxes, and elderly women used their bare hands, to pry up paving to stock as ammunition. The Health Ministry said 26 people were killed in the fighting in the capital, of which 10 were police officers. A ministry official, quoted by Interfax, said 263 protesters were being treated for injuries and 342 police officers, mainly with gunshot wounds. 

For Europe this could be a major concern as they depend on the Ukraine pipelines for natural gas! Stay tuned!

 

 

About the Author
Phil Flynn

Senior energy analyst at The PRICE Futures Group and a Fox Business Network contributor. He is one of the world's leading market analysts, providing individual investors, professional traders, and institutions with up-to-the-minute investment and risk management insight into global petroleum, gasoline, and energy markets. His precise and timely forecasts have come to be in great demand by industry and media worldwide and his impressive career goes back almost three decades, gaining attention with his market calls and energetic personality as writer of The Energy Report. You can contact Phil by phone at (888) 264-5665 or by email at pflynn@pricegroup.com. Learn even more on our website at www.pricegroup.com.

 

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