this is bbc news. we will have the headlines and all the main news stories for you at the top of the hour, straight after this programme. hello everybody and welcome to talking business weekly, with me, aaron heslehurst. let's go and take a look at what's on the show. is europe heading for an energy emergency? energy companies across the continent warn of higher prices. limited rationing is already under way in germany as the supply from russia starts to drop off. in america, they've released more oil to the market but is it enough to keep us all going? with more sanctions and cold weather on the way, are we looking at a perfect storm for the energy market?

i'm going to be discussing all of that with these two, there they are, dr ulrich hoppe, the director general of the german british chamber of industry and commerce. and helima croft, a member of america's national petroleum council, which advises the us energy secretary on strategy. also on the show, the big boss of the middle east's oldest privately held oil and gas company, crescent petroleum, joins me to talk about those skyrocketing prices, energy supply and the impact of the war in ukraine. wherever you'rejoining me from around the world, once again, a big hello and a warm welcome to the show. you know, they war

between russia and ukraine is about to enter its sixth month. the human suffering on the ground has been massive and the economic consequences of the war and the sanctions imposed on russia, are spreading around the world. nowhere is it as stark as the oil and gas industry. vladimir putin's invasion of ukraine is causing energy prices to skyrocket around the world. russia, it supplies around a quarter of europe's oil and 40% of its natural gas. in germany, the nord stream i gas pipeline, which brings natural gas from russia, is shut for maintenance untiljuly 21st. but some fear russia may not turn the gas back on, as it has already reduced supplies to western europe. in germany, there is minor rationing of hot water and the dimming of streetlights. in fact, the country's economy minister says he's taking shorter showers and the boss of uniper,

the biggest german importer of russian gas, is asking the government for a bailout and warning customers about massive price rises. translation: german| consumers will be faced with a huge price wave. we have to repeat this over and over again. next week and already we will inform our clients about the current situation and tell them that significant price increases are to be expected. in isolated cases, we will not be able to rule out supply cuts as part of our existing contracts. the current situation leaves us with no other option. and the outlook? it's only going to get even more challenging as winter comes to europe, temperatures cool, demand rises and an even bigger set of sanctions kick in. later this year, european companies will no longer be able to insure ships carrying russian oil anywhere in the world. plus by the end of the year, europe is banning all oil imports from russia delivered by sea. plus, germany and poland

are also banning oil deliveries coming from a pipeline. meanwhile, the united states has blocked all oil and gas from russia. that was announced by president biden in march shortly after the invasion. russian oil will no longer be acceptable at us ports and the american people will deal another powerful blow to putin's war machine. this is a move that has strong bipartisan support with congress and, i believe, my country. america have rallied to support the ukrainian people and made it clear we will not be part of subsidising putin's war. president biden also announced back in march the release of american oil reserves to keep the market liquid but only for six months. and he visits the middle east and big opec players like saudi arabia. energy politics is clearly changing the rules of international diplomacy. so, with supply down and no immediate signs

of that changing, what's the impact likely to be for all of us? well, let's start in europe, because a little earlier i caught up with the director general of the german—british chamber of industry and commerce. dr ulrich hoppe, a real pleasure having you on the show. ulrich, can we start with this, what happens onjuly 21st if the russians don't turn the gas back on? i think the german government will start with actually preparing for a rationing of gas. they have to then build plans up in how to deal with the coming winter and they have to then prioritise who gets gas in the first place and who gets it in the second place. currently it's the consumer in the first place and industry in the second but i think there will be a different compromise that will need to be found. ulrich, germany has said that they won't be using oil and gas from russia

come january. that is, what, six months away? can they really be ready for that? that remains to be seen. that depends, really, whether they can make or fill up all the tanks to 100% before the winter starts because then they can come through the winter and then if we've got another six months until the next winter, so that gives them enough time to fully diversify their supply chain for gas and russian oil. and, ulrich, as we know, you represent german business. how are they reacting to this energy uncertainty? of course they also look at their production processes, what they might need to cut, what they can cut without destroying their business. so i think the companies who are heavily dependent on gas, they are actually making contingency plans in terms of how do we cope with certain levels of gas supply, be they more, be they less and then how to react in terms of their production planning in terms of their resources and the products they are producing. if consumers have to continue to endure these soaring costs, do you think that might change attitudes towards the sanctions against russia in germany?

it remains to be seen but i think... i don't think that will change the attitude towards the sanctions because the war in the ukraine and the russian aggression, that is too close. so i think we've moved back into a world of the cold war scenario and i think the population in germany feels that danger and they know they have to have a price to be paid to have stability, security and so on. if consumers have to continue to endure these soaring costs, do you think that might change attitudes towards the sanctions against russia in germany? it remains to be seen but i think... i don't think that will change the attitude towards the sanctions because the war in the ukraine and the russian aggression, that is too close.

so i think we've moved back into a world of the cold war scenario and i think the population in germany feels that danger and they know they have to have a price to be paid to have stability, security and so on. so that is my prediction but we don't know what's going to happen. but i think there's been no real criticism of the sanctions from the public. well, on that note, ulrich hoppe, thank you very much for your time. much appreciated and i'll talk to you soon. thanks for having me, bye—bye. but, of course, the energy crisis, it's not limited to europe, farfrom it. in america, prices are also on the up, despite an unprecedented six months of the extra oil being released from its reserves. so i've been speaking to one industry expert who sits on america's national petroleum council, which advises the country's scretary of energy. she's also head of commoditiy strategy rbc markets. helima croft, a real pleasure having you on my show. thanks for your time.

helima, let's start with this. with russian oil and gas dwindling and more sanctions on the way, is the rise in prices, is it a necessary cost of the sanctions? well, i mean, ithink this is an interesting question about what is the cost that the west is willing to pay for supporting ukraine? now what is interesting is that the major sanctions on russian energy have not hit yet. those will be coming into effect in december. so the key question is really going to be, how much further do prices rise from here, when we start to see potentially significant russian export disruptions? on that point then, we know europe is banning russian oil delivered from the sea and some by pipeline. it's also going to ban insurance companies from ensuring shipments of russian oil anywhere on the planet. lordy, i mean, what is the potential impact of all of that? i mean, i think the insurance sanctions are far more significant than many market participants realise because if these sanctions

remain in place, that will mean that it's going to be very challenging to ship those 2 million barrels that won't be going into europe to asian markets. we've seen a really big uptick in indian buying of russian crude because it's been so heavily discounted. but if those insurance sanctions kick in, it's going to be a lot more challenging to simply move those barrels to india. hence why the g7 is discussing potentially doing price cap mechanisms, which would essentially allow a european insurer to ship those cargoes to asia as long as those cargoes are price cap. so russia would get far less money for the oil and as such a price cap arrangement. and, helima, how bad could it get in europe, in january when the full sanction to? in january when the full sanctions hit? i mean, i think this is really the most important question, in terms of the potential

recession impact of the war, is what's going to happen in europe? with gas in particular, we're actually watching for what happens onjuly 22nd. the all—important nord stream i pipeline which brings russian gas to europe, that is down for maintenance right now. i mean if they don't turn those gas taps back on and we have a cold winter, then you are talking about rationing, industrial curtailment and much higher utility prices for european consumers. it is essentially a perfect storm scenario.

is there enough, i mean if we look at lng, qatar, they've got oodles of that. my home country, australia, i mean those sort of places can't fill the gap? here's the challenge: there's not a lot of additional spare incremental gas supply out there and many of the cargoes, you talk about qatar, you talk about australia, they are actually bound for asia under long—term contract. and so the question is, how much additional supply can be re—routed into europe? and it looks fairly constrained, hence the real concern about what happens in a russian gas cut off scenario. on the oil side, there is some additional supply out there, not a lot, but the situation for gas looks much more precarious. well let's go back to oil,

you mentioned president biden�*s visit to the middle east, to saudi arabia, a big member of the opec group. can the opec group, you say it's tight, supply is tight but can they do more? i mean, saudi arabia, if you look at what they say is essentially their maximum spare capacity, or sustainable capacity, they say they can go up to around 12 million barrels. they are currently producing over ten. so there is some additional volume the saudis can bring to the market. but the problem is, if they exhaust all of that capacity now, there will be no shock absorbers to deal with any additional supply disruptions. and we have a number of producers that are experiencing production problems. libya, for example, is down by abouti million barrels because of civil strike in that country. so there is real concern that as we head into the start date of these serious sanctions on russian energy exports, if saudi exhausts everything it has right now, there's not going to be really anything left to deal with any additional disruption.

helima, we've talked about opec but there is also opec plus, which russia is a part of. do you think the relationship, russia's relationship with opec will change because of the war? well, this is a great question. because russia has been essentially the co—chair of the opec plus arrangements since 2016, when you had russia essentiallyjoin the producer group to really put a floor under prices. and the saudis and the emiratis, the two big middle eastern reduces, have really said that they are looking to keep russia part of the group. they're not looking to break with moscow, despite the escalating western sanctions, despite their requests from countries like the united states for more opec barrels. so i think that opec are going to try to find a way to put some more supply on the market, while keeping russia within the producer group. but one source of potential tension that we should be

watching for over the coming months is that russia has been discounting their barrels in the key asian markets. they are now the top supplier in india. they have essentially taken iraq's number one spot. and so the question is, how are they opec producers going to like to have to compete with russia when it comes to price for the all—important asia market? back in march, helima, president biden released petrol oil reserves for six months. is that going to be extended? well this was the largest release from the united states�* strategic petroleum reserve. it will be exhausted in october and the question is, what comes next? but because the united states is a member of the international energy agency, we are required to hold stockpiles for 90 days at import cover. that means when this blockbuster release is finished, we're not anticipating another major release again because of the requirements by the iea to hold the 90 days of cover.

so when that release winds down it will be a very important question about where are the additional supplies? because that release winds down right when we are talking about the sanctions on russia kicking in. helima, do you think governments in europe and the united states can keep their electorate, their consumers, onside with sanctions if these prices are pretty much anything are just going to continue to soar? the real question is — what comes next in terms of prices? i mean, gasoline prices have come down in the united states. the question is, when these sanctions kick in, do we once again see prices reach $5 a gallon? what does that mean for approval ratings for this administration? but i think the real pain point�*s going to come in europe — it's going to come over this issue of natural gas.

if we have industrial curtailment and skyhigh electricity bills for european consumers are these consumers going to turn against the war? will they turn against their government's �*s support for ukraine? it will be an interesting test case of the price that western consumers are willing to pay for the defence of very important ben small is about sovereignty and the postwar security architecture in europe. well, on that note, and despite the rather gloomy picture you've painted, it's been a real pleasure having you on. helima croft, thank you very much foryourtime, and i'd love to talk to you again soon. thank you so much for having me. so we've been looking at how businesses in germany and across europe are coping with an energy supply crisis and how the american government is responding as prices at the pump have shot up sky high. but what about the oil and gas companies? what's the strategy for the suppliers outside of russia? well, let's find out, because i caught up with the boss of the world's oldest privately owned oil and gas company in the middle east.

majid jafar, thank you so much for coming on my show. really appreciate your time. majid, crescent petroleum, you supply the black stuff, you don't refine it into to petrol or gasoline prices, but you're well aware around the world we're seeing gasoline and petrol prices skyrocketing, leading to protests from the us to ghana to here in the uk. are these current prices fair, do you think? there's huge differences from country to country or even region. within europe, a big percentage of the price the end user pays is actually tax, whereas in the us a much smaller amount of it is tax. clearly these products are globally traded. there's a been a huge surge of demand from the us coming out of the covid pandemic, and that has been, you know, sucking in supplies from elsewhere. we've seen stocks coming down. we've seen refineries going at full capacity. again, a big driver of the ultimate price is the price of crude oil.

you know, the upstream price. we've seen some stability there. it's been a big contributor to inflation over this past year. i don't think it will be as big a contributor to inflation next year because obviously inflation is relative, but these are quite high prices. i mean, even in the us, talking about $4 a gallon and higher and higher is politically significant, particularly now with the summer driving season. majid, do you think europe put too many of its eggs in one basket, in terms of energy? so in terms of a particular type of energy or...? oiland gas and relying on russia. so, actually, you know, every country in europe has a different mix. i think what we had seen here in this country, in the uk, of course they've got north sea and they've recognised more recently that they still need to be investing in that. other countries like germany,

you saw a little bit of ideology. so after fukushima, just cancelling all the nuclear plants and now there's a bit of regret. we can't be ideological or short term in thinking about yes to no, yes or no to this or that energy supply or any type of energy. it's got to be about the energy mix that achieves affordability and security while bringing down our emissions. agnostic in a way, and not ideologically, unfortunately, we haven't always seen that until recently. let's talk about the gas supplies into europe and with winter around the corner, physically, it could be done — you could supply gas to europe? in this particular period where, you know, there's a lot of worry about gas supply in europe, could you do it? i think europe will need all possible supplies of gas, and we're seeing that. we're seeing european companies and governments coming to the middle east, going to africa, seeking to buy up gas supplies.

the irony, of course, is for the last many years, they've refused to fund projects that met power needs within places, like africa, using gas. so there's a sense in the developing world of a bit of double standards here now, that you refuse to fund gas — fired power or nuclear or even hydro in many countries — while you're using all of those yourselves in europe. and now you want our gas, you know, african gas, let's say, to meet your needs, while your institutions haven't come up with the climate finance commitment that you made that was supposed to have been paid two years ago, just $100 billion, dwarfed by what's being spent within europe and within the us, even though emissions in those continents have been falling for decades now. and now you want our natural resources and you're willing to, you know, put your climate commitments to one side, which is what we've seen a little bit in the last week,

even in europe. but you say supply is tight, but, correct me if i'm wrong, opec could increase its supply, couldn't it? so there's actually currently very little supply capacity, spare capacity in the opec system. currently, opec members are struggling to produce even their target quotas as they are. there may be some, or there is likely some, in saudi arabia. but not very much. is it a million barrels, less than a million barrels? and perhaps some hundreds of thousands of barrels from places like the uae. but it's not much overall in the larger scheme of things. and the issue is it takes time and a lot of investment to add to that capacity. and also, you don't want to be losing all the spare capacity because it's kind of the balancer that leads to stability in prices. if all the spare capacity goes in the system, you end up with much more price

volatility, which is really harmful for the global economy. majid, as we know, russia is part of what they call the opec+ group. but i'm wondering, given the war, do you think the relationship between opec and russia will change? so that, you know, partnership the opec+, it's russia and several other producers who weren't previously in opec. that's about collaborating or cooperating to manage global energy price stability. and, actually, we sawjust two years ago, during the covid pandemic, that the whole world relied on that and actually joined in that alliance. the us government encouraged us companies to participate in that when oil prices crashed and actually hit briefly negative levels. so it's been important for global energy stability. it's not about, you know, necessarily friendship or political alliance.

we've seen in the past opec members sometimes at war with each other, iraq and iran during the 1980s for an eight year war, and yet managed to continue to collaborate partner within opec. i'd also like to just take the opportunity to remember and honor secretary general mohammad barkindo, who's a good friend, who passed away recently and suddenly and his end of his tenure in opec. he was a great figure in the global energy stage and played a key role in that diplomacy in those critical years. do you think the relationship with opec and russia is part of the reason we are not seeing many of the opec nations join in on the sanctions? i many of the opec nations “oin in on the sanctions?* in on the sanctions? i think those are _ in on the sanctions? i think those are two _ in on the sanctions? i think those are two separate - in on the sanctions? i think. those are two separate issues because sanctions are about

trade, whereas opec is about, opec members do not trade court the mac oil with a cello. they come on the global market, coming together to set targets and quotas to manage global energy supplies. no matter what geopolitical issues are going on in the world or even conflicts, i mentioned in the middle east we have had many conflicts in the past, that cooperation from global energy price stability is still fundamental for the world economy. well, on that note, majid jafar, thank you so much for your time. much appreciate it. thank you, good to be with you. well, that's it for this week's show. i hope you enjoyed it. don't forget, you can get the latest updates on the war in ukraine and the impact it's having on our global economy on the bbc website or the smartphone app. you can also follow me on twitter. tweet me, i'll take you back. you can get me @bbcaaron. thanks for watching. i'll see you soon. bye— bye.

hello there. monday's heat was extraordinary, not least because it covered a really wide area. 38.2 celsius the highest temperature recorded at santon downham in suffolk, very close to the all—time uk record. jersey had its hottest day on record. wales had its hottest day on record as well, and with this met office red warning for extreme heat still in force through tuesday, some places could see temperatures get even higher than that. because we start tuesday morning in a wedge of exceptionally hot air. this is actually the air overhead. the hottest it will have been throughout the whole of this heatwave period. so as the sun gets to work

on that, after starting temperatures like these, well, those values will really start to rise very quickly as we go through the morning where we hold onto sunshine. most of us will have a sunny start. the further east you are, you can expect to keep sunshine through into the afternoon, potentially one or two showers, but for northern ireland, for wales, the southwest of england, we are going to see more cloud, maybe some showers and thunderstorms working in here, cloud bringing some rain into western parts of scotland as well. for western parts, a little bit cooler than it has been, but for the east, still some extremely high temperatures. maybe middle 30s across parts of southern scotland. and for some of these central and eastern parts of england, temperatures could climb to 40—a2 celsius. so that would be unprecedented. through tuesday night, we will see some rain across northern scotland and some showers and thunderstorms elsewhere. it starts to turn a little bit fresher from the west, so by the end of the night, temperatures in glasgow and belfast will be around 14 degrees. still very warm across central and eastern parts of england, still in the midst of this very warm air. but we do see these cooler conditions pushing in from the west as we get into wednesday.

so a different feel to the weather on wednesday. we will see some showers around, maybe some thunderstorms popping up, perhaps most especially across central and eastern parts of england as we go through the afternoon. some spells of sunshine as well, but temperatures much lower. still 28—29 celsius across eastern england, more like 19 celsius for northern ireland and the western side of scotland. we stick with those cooler conditions for the rest of the week. there will be some sunny spells, but some bursts of rain at times. some of that rain could be heavy, possibly thundery. bye for now.

welcome to bbc news. i'm david eades. our top stories: wildfires tear through european countries — france now the worst affected, with 30,000 people forced from their homes. up in the woods, you can see guys tackling the fires. there is a huge amount of activity down here, and it is hot, it is smoky — just look at the haze in the trees. sentencing begins for the parkland school gunman, who killed 17 people, in 2018. ajury in florida will decide if it's the death penalty or a life sentence. a chinese filmmaker appears in court in malawi, charged with child exploitation, following an investigation by the bbc, and here in the uk, it's whittled down to four in the race to replace borisjoohnson

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