Russian invasion of Ukraine risks driving energy prices higher

Major stockmarkets are surprisingly calm about Russian's invasion of Ukraine. But it's a different story in energy and commodity markets.

Ukrainian soldier in a trench
Ukrainian troops dig in as Russia moves to invade
(Image credit: © Stringer/Anadolu Agency via Getty Image)

“There is a whiff of 1914 to the crisis in Ukraine,” says Jeremy Warner in The Telegraph. Russian president Vladimir Putin’s decision to send troops into two separatist-held regions in eastern Ukraine has heightened the risk of “the most serious outbreak of hostilities in Europe since the Second World War”. Yet major stockmarkets are surprisingly “insouciant”. Investors may think a major war would be irrational for all sides and therefore won’t happen, but “the irrational has always played a major role in history”.

The Ukraine crisis has so far been felt most acutely in energy markets. Brent crude oil prices rose above $99 a barrel on Tuesday, their highest level since 2014. Russia provides about one-tenth of the global oil supply, but those exports may be curbed by future sanctions. European wholesale gas prices have fallen back sharply this year, from a December record high of €188 per megawatt hour to around €79 at present, but Germany’s decision to suspend certification of the Nord Stream 2 gas pipeline in response to Russian actions raises the risk of a renewed spike. Europe’s biggest economy gets two-thirds of its natural gas from Russia.

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Markets editor

Alex is an investment writer who has been contributing to MoneyWeek since 2015. He has been the magazine’s markets editor since 2019. 

Alex has a passion for demystifying the often arcane world of finance for a general readership. While financial media tends to focus compulsively on the latest trend, the best opportunities can lie forgotten elsewhere. 

He is especially interested in European equities – where his fluent French helps him to cover the continent’s largest bourse – and emerging markets, where his experience living in Beijing, and conversational Chinese, prove useful. 

Hailing from Leeds, he studied Philosophy, Politics and Economics at the University of Oxford. He also holds a Master of Public Health from the University of Manchester.