Trump’s Peace Plan: Easing Tensions, Lowering Energy Costs
Donald Trump is expected to unveil a peace plan aimed at resolving the ongoing Russia-Ukraine conflict, and it could have major ripple effects on global commodity markets, especially energy prices.
According to analysts at Goldman Sachs, the biggest and most immediate impact of a potential peace agreement would likely be felt in Europe’s natural gas and oil markets. Trump is set to present his proposal at the Munich Security Conference, and it is anticipated to focus on reducing hostilities and possibly reopening Russian energy supplies to Europe.
Before the war, Russia provided around 30% of Europe’s gas supply. Since the conflict began, that supply has dropped to nearly zero. European countries scrambled to find alternative sources, which pushed natural gas prices up significantly.
Goldman Sachs suggests that if Russian natural gas begins flowing back into Europe, prices could fall anywhere from 15% to as much as 50%. In practical terms, if supplies return to pre-war levels, the price of natural gas (measured as TTF in Europe) could drop to the mid-20s EUR per megawatt-hour, a sharp decline from current prices.
Even a modest resumption of Russian pipeline flows through Ukraine would ease pressure on European storage levels, further bringing down gas prices compared to coal. This could offer much-needed relief to European consumers and businesses who have been grappling with high energy costs.
As for oil, Goldman Sachs analysts believe that relaxing Western sanctions on Russian crude might not result in a supply surge. Global oil production is closely managed by OPEC+, and sanctions have primarily redirected Russian oil exports towards markets like India and China.
While a peace agreement remains uncertain, Trump’s proposal has the potential to reshape energy markets in Europe and beyond. For now, all eyes are on the Munich Security Conference to see if his plan can bring a breakthrough in the long-running conflict.
