LONDON : A potential invasion of Ukraine by neighbouring Russia would be felt across a number of markets, from wheat and energy prices and the region's sovereign dollar bonds to safe-haven assets and stock markets.
Four major exporters - Ukraine, Russia, Kazakhstan and Romania - ship grain from ports in the Black Sea which could face disruptions from any military action or sanctions. As part of possible sanctions should Russia invade Ukraine, Germany has said it could halt the new Nord Stream 2 gas pipeline from Russia. The pipeline is projected to increase gas imports to Europe but also underlines its energy dependence on Moscow.
JPMorgan said the tensions risked a"material spike" in oil prices and noted that a rise to $150 a barrel would reduce global GDP growth to just 0.9per cent annualised in the first half of the year, while more than doubling inflation to 7.2per cent.Listed western firms could also feel the consequences from a Russian invasion, though for energy firms any blow to revenues or profits might be somewhat offset by a potential oil price jump.
U.S. energy firm Exxon operates through a subsidiary, the Sakhalin-1 oil and gas project, in which India's state-run explorer Oil and Natural Gas Corp also holds a stake. Norway's Equinor is also active in the country.
Both countries' dollar bonds have underperformed their peers in recent months as investors have trimmed exposure amid escalating tensions between Washington and its allies and Moscow.