Russia’s inva­sion of Ukraine has dom­i­nat­ed head­lines as a human­i­tar­i­an cri­sis in East­ern Europe, which it is, first and fore­most. It also has sweep­ing impli­ca­tions for the glob­al ener­gy indus­try and is affect­ing every­one on the plan­et, and it will con­tin­ue to do so. With Rus­sia play­ing a major role in the glob­al sup­ply of crude oil and nat­ur­al gas (as well as oth­er com­modi­ties), what can we expect for the near-term and long-term impacts of its inva­sion and for the accom­pa­ny­ing respons­es from com­pa­nies and gov­ern­ments across the world? 

The impacts are sub­stan­tial, and most busi­ness­es and indi­vid­u­als will need to make sig­nif­i­cant adjust­ments. For many, now is like­ly to be the best time to eval­u­ate and/​or pur­sue addi­tion­al or replace­ment financ­ing. It is vir­tu­al­ly inevitable that the cost of both debt and equi­ty cap­i­tal will size over the com­ing year, and terms will be more dif­fi­cult, while addi­tion­al liq­uid­i­ty will like­ly become more valu­able. Even those out­side the ener­gy indus­try will see rip­ple effects due to the inva­sion and cor­re­spond­ing glob­al mar­ket disruption.

Impacts to date: Russia’s inva­sion and the glob­al response

Play­ers across the globe have tak­en deci­sive action in response to the inva­sion and to relat­ed threats. In addi­tion to pro­vid­ing mil­i­tary sup­port for Ukraine, the US, Cana­da, and Great Britain have banned Russ­ian oil and gas imports (both direct and indi­rect), and many regions and com­pa­nies have imposed cur­tail­ments of their own, relat­ing to oil and gas as well as oth­er prod­ucts. For oil, those cur­tail­ments have reduced Russ­ian exports by 3 mil­lion bar­rels per day (mm b/​d), which togeth­er with the con­flict has moved prices dra­mat­i­cal­ly. At the same time, NATO coun­tries have sent unprece­dent­ed amounts of mil­i­tary aid and equip­ment to Ukraine to sup­port the country’s efforts to resist the inva­sion and pro­tect its cit­i­zens. We’re also see­ing numer­ous coun­tries begin to think ahead in terms of their ener­gy needs, con­sid­er­ing alter­na­tive sup­plies to oil and gas — with Europe, in par­tic­u­lar, expect­ed to accel­er­ate renew­able ener­gy projects and to seek oth­er sources of oil and gas.

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