Prior to the Russian invasion of Ukraine, the Russian Ruble traded within the region of ₽75/$ – ₽90/$. However, faced with the myriad of economic sanctions from the United States of America and over 50 countries, the currency was hit by significant FX pressure resulting in a sharp depreciation of the Russian Ruble, over 50% of value to trade around the region of ₽140/$ – ₽160/$, hitting a record low of ₽158.3/$ as of 07-Mar-22. However, the Russian Ruble staged a dramatic recovery, as it is currently trading around the region of ₽75/$ – ₽80/$, as of April, despite the unprecedented sanctions and the exodus of Western companies. It is important to note that a critical driver to this recovery comes from President Putin’s decree on the last day of Q1-22, demanding payment for Russia’s natural gas in rubles, however, tempering the order to allow dollar and euro payments through a designated bank.

With Russia accounting for over 24.0% of the World’s total natural gas reserves, global reliance on its supply is unavoidable. As of Q1-22, Russia accounted for about 45.0% of the European Union’s gas imports and 40.0% of its total gas consumption. We expect a sharp upsurge in global gas prices following the latest Russian move. However, subject to the compliance of the World to the Russia Gas-Ruble Payment mandate from the Russian government. However, with the EU announcing a strategy to reduce its reliance on gas from Russia by two-thirds by the end of 2022 via the Repower EU plan, which aims to find alternative supplies of gas and greener energy sources, we expect increased patronage of SSA gas by the EU,  in a bid to bridge any form of potential supply lag.