OilPrice.com
- Russia’s invasion of Ukraine has caused plenty of analysts to worry about the future of global financial and energy markets, but there is a major consequence being overlooked.
- Russia and Ukraine are major exporters of food and agricultural products, and if these products are disrupted then there could be significant unrest in the MENA region.
- The MENA region will also have to deal with the energy, security, and financial consequences of taking sides in what is sure to be a protracted conflict between Russia and the West.
The ongoing military Russian onslaught on Ukraine is reverberating across commodity markets. At present, Western media is mainly focusing on the direct effects of the military invasion and resultant sanctions on European and U.S. commodity markets. Crude oil prices are spiking while natural gas markets are in crisis mode. The importance of Russia in European energy markets has been highlighted in recent weeks, revealing the extent of European dependence on Russian oil and gas imports. Even U.S. energy markets have been hit by these developments. At the same time, Western politicians are calling on OPEC to prepare additional production to counter a possible blockade of Russian energy exports. This apparent belief that OPEC has the capability to save energy markets is one that may well be shaken in the near future. The Russia-Ukraine crisis will be a major destabilizing factor for the MENA region, threatening unrest in the streets of Cairo, Riyadh, and other places. The impact of the crisis on agricultural commodities and even tourism could also be significant.
