In this interview given to Dani Burger and Manus Cranny from Bloomberg, Dr Carole Nakhle, CEO of Crystol Energy, discusses the impact of the Ukrainian-Russian crisis on energy markets.
Dr Nakhle stresses that the current situation engages some kind of guesswork, and especially when it comes to the definition of what a military action entails. Is it going to be a small incursion or a fully-fledged war? All scenarios are possible, each with different implications on economy and energy markets. If we are, for example, talking about an immediate reaction, we are going to see spikes in prices; however, depending on the extent of the crisis we might see the opposite impact.
She then explains that a military action initiated by Russia will most likely lead to sanctions on the country, although the effectiveness of them remains questionable. However, it is unlikely that the sanctions will target energy supplies as we are already in a very tight market, but rather specific projects, including those in energy.
Dr Nakhle further comments on the geopolitical risk premium, highlighting that no one knows exactly how much of it is already been factored in prices. There are expectations that over the longer term, geopolitics are likely to ease the pressure, especially with more supplies expected to hit the market in the second half of this year. US shale seems to be coming back. Iran remains also a question, with more supplies added to the market if a deal is to be reached.
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