How impacts from the Russia-Ukraine war rippled across the energy market

How impacts from the Russia-Ukraine war rippled across the energy market



One year ago today, Russia launched its invasion of Ukraine, sending energy prices on a volatile run. And where is an energy market now, a year into the war? Here, break it all down in this installment of what just happened. I'm the finances. Jared, look, Jared. Yes, well, we saw a number of events pulled out, not only in the energy markets, but also in the futures and equities as well. I have a timeline of oil price changes in response to world events that goes back 50 years. And we'll see real quick on our energy heat map what has happened to energy stocks over the last year.

And we can see X on up 45 percent, Occidental Petroleum up 50 percent. It's not only within the last year that this happened. A lot of these trends started before. And the war over in Ukraine was just kind of icing on the cake. Here's a three-year chart. And you can see leading into that, this would be about the timeline of the initial invasion. The trend had definitely been up.

It was only a couple of years before that crude oil went negative. WTI traded at negative $40 per barrel. I will still remember that. And now let's take a little journey in this timeline because we've seen the price of oil react positively. That is with higher prices to geopolitical events in the past. And you can look right here. Here's the Iranian Revolution in 1978, the Iran-Iraq war in 1980.

Iraq invades Kuwait in 1990, the September 11, the 9-11 attacks. Over here we had the global financial crisis. So that was not critically not a geopolitical event, but nevertheless, over here on the right-hand edge, we are seeing that as well with Russian invasion of the Ukraine. And one thing I want to point out here is that the price of oil is extremely volatile. And this makes it very difficult for producers to forecast in their own models. And both prices to the upside and swinging down to the downside give as much consternation to a lot of these producers. So it's not just higher prices equals better.

This volatility in the oil and energy markets is not necessarily a good thing for a lot of these energy majors. Now let me show you what's happened in the futures markets. This is commodities over the last year. Right here in the middle or thereabouts is crude oil. And let me put a three-year chart on there so you can see. Here's that run-up from those lows in 2020 and April of that year into the invasion time period. And then we saw a general fall-off from that initial move higher.

And I put that in a little bit more granularity by looking at a one-year chart. Now a big part of this too, there's other things going on in the world. Of course, we had the slowdown in China because of their zero COVID policy. We've recently seen the reversal of that, but we're not really seeing lift off in terms of the price of crude oil just yet. Now OPEC Plus is a huge factor. We did receive news that Russia has been cutting their supply of crude oil to the world markets. I believe that announcement was made about a month ago, but overall OPEC Plus has pledged to keep its policy in place over or throughout the rest of this year.

It's a policy that they put in place last year and they don't want to disrupt that. Now you got to think of crude oil prices plunged to $60, $50 per barrel. They might get up in arms a little bit, might start restricting some of their own production volumes, but no sign of that yet. And of course, we also have political considerations within the US that gets to the Biden administration and you have on the one hand, the transition to a carbon free environment by a certain year, by certain deadlines, 2030, 35, 40. And on the other hand, you have the pressing needs of a public that is dealing with high inflation. So prices at the pump have definitely been front and center as well. Want to point out natural gas, we showed the crude oil prices, natural gas, they call it the widowmaker for a reason, very volatile price action over the last year.

You can see down about 46% from that level, but down quite a bit more from these highs that we saw in August, September of last year. Julie. Thanks so much, Jared. I appreciate it.



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