Modest Disruptions

“Ukraine’s impact on energy markets likely limited – potential sanctions against Russia would likely have larger impact on energy prices given country’s large production and exports. We find that while European natural gas prices rallied sharply yesterday (having retraced some of those gains today), there are no fundamental reasons for concern as most Russian natural gas bound for northwest Europe bypasses Ukraine to the north. Similarly, crude oil flows through Ukraine are generally small relative to the global market and are therefore unlikely to impact the global oil balance. Assessing agriculture spillover from Ukraine – corn and wheat markets most exposed – global stocks sufficient to offset modest disruptions – sanctions against Russia would likely have larger impact on agriculture prices given country’s larger production and export share of global wheat and oilseed markets. While potential export or spring planting disruptions could support prices in the near term, global inventories appear sufficient for both corn and wheat to offset modest disruptions.” (Goldman Sachs)

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