The costs of adjusting to a less globalized economy could be steep, writes EricLevitz
These Russian oil pumps may be getting less work in the coming months. Photo: Andrey Rudakov/Bloomberg via Getty Images Russia’s invasion of Ukraine represents the gravest challenge to peace in Europe since World War II, and, according to some, the onset of a new era in world history.
Never in modern history has an economy of Russia’s scale been subjected to such extraordinary ostracism. The ruble’s value swiftly plummeted. According to analysts at JPMorgan Chase, the Russian economy is now poised to shrink by 7 percent this year. Other forecasters paint an even darker picture, with The Institute of International Finance projecting a 15 percent contraction in Russia’s GDP.
If the West’s governments threw Putin a lifeline, however, its private sector is steadily cutting through it. There is also a widespread belief among traders that, as Russia ramps up its attacks on Ukrainian civilians, Western governments will eventually feel compelled to use their remaining economic weapon. So buyers are looking to get ahead of that development by securing new suppliers now. Finally, a lot of participants in the energy trade simply do not want to be bankrolling war crimes . This moral objection to facilitating the Russian energy trade is not confined to executive suites.
As of late Friday morning, a barrel of Brent Crude Oil was trading at $114.50, its highest level in nearly a decade. Meanwhile, the Dow Jones Industrial Average was down 500 points on the day.
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