Russia’s invasion of Ukraine and the resulting international backlash has plunged energy markets into chaos, threatening dire economic consequences that rival those of the 1970s oil shocks.
Russia’s sudden economic isolation is choking off a major global source of energy, metals and crops, threatening the country’s very foundations and raising fears of something the developed world hasn’t suffered in decades — acute inflation and real energy shortages. Russia’s invasion of Ukraine and the resulting international backlash has plunged energy markets into chaos, threatening dire economic consequences that rival those of the 1970s oil shocks. Graphic: BLOOMBERG
“We’ve never seen such steep and sudden commodity price spikes across so many assets,” said Henning Gloystein, an analyst at Eurasia Group. “Until there’s significant de-escalation, the record or elevated prices due to sanctions and disrupted supply chains will continue for many commodities.” Temporary relief for consumers could come from an unlikely quarter: Iran. Diplomats in Vienna are closing in on a nuclear accord that could remove sanctions on the Islamic Republic’s crude, greenlighting the return of well over 1-million barrels a day to the market.
The rest of the Opec+ coalition has remained on the sidelines. Saudi Arabia has rebuffed calls from the White House to cool the price rally by tapping its spare production capacity, a move that would strain its own political ties with President Vladimir Putin.
And there are still people thinking what Putin is doing is a good thing....