Russia's sudden transformation into pariah is sending companies scrambling

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The rapid transformation of Russia into a geopolitical pariah is forcing global companies to scramble to reassess their investments, supply chains and other connections to the Russian economy.

“This military action represents a fundamental change,” BP chair Helge Lund said in a statement. “It has led the BP board to conclude, after a thorough process, that our involvement with Rosneft, a state-owned enterprise, simply cannot continue.”Major manufacturers are rushing to assess the impact of the war on their already stressed supply chains, as Russia supplies key elements like palladium and titanium.

Boeing gets about one-third of its titanium from Russian sources, though the company has stockpiled the material during the pandemic, according to a person familiar with the matter. The auto industry is getting jittery over the potential impacts, including on the supply of materials used to produce semiconductors, which are already exceedingly hard to get.

“Russia is not a large manufacturer, but it dominates the supply of certain key commodities including metals like palladium and gases such as xenon,” Capital Economics economist Jennifer McKeown wrote Monday.Russia is still not being blocked from exporting oil and gas, the country’s core source of international revenue. Nor has Russian President Vladimir Putin yet taken steps to disrupt the flow of energy.

Cutting off or sanctioning Russian oil and gas would lead to a further escalation in global energy prices — with a particularly stark impact on Europe, which relies heavily on Russian gas.Companies with investments in Russia may be forced to stomach losses, but the biggest impact would come if leaders target energy.

 

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