‘Russia risk needs to be seen in perspective’
A leading German economist on Monday urged investors not to exaggerate financial risks around a possible Russian invasion of Ukraine, saying an invasion would merely lead to a “temporary setback” while underlining the need to put the Russia risk into perspective.
“All in all, we would expect the European economy and markets to rebound shortly afterwards from a temporary setback which a Russian attack on the Ukraine would probably cause,” said Holger Schmieding, Chief economist at German private bank Berenberg. “Let’s hope it does not come to that.”
Draghi’s promise is at stake
President Biden and Olaf Scholz, the new German Chancellor, are not on the same page regarding Nordstream 2. Biden threatens that no natural gas will flow through the pipeline if Russia invades Ukraine. But for Germany, Moscow is much closer and Scholz will realise that 40 percent of all natural gas in Europe comes from Russia.
Unlike the Netherlands, Germany is actually switching to natural gas, away from lignite and oil boilers. Meanwhile in Moscow, Macron is trying to de-escalate the issue, if only for the upcoming French elections.
Ukraine: elephant in the commodities market room
In periods of low interest rates, high stock market prices and persistent inflation, the usually volatile commodity markets are once again in the sights of investors. This is also the case now, but this time there is another complicating factor: 100,000 Russian soldiers on the border with Ukraine, which the US president expects to invade the neighbouring country.
Commentary: new oil crisis imminent
Ultimately, the price of oil is determined by supply and demand. What is special about the oil price is that, in theory, there are several equilibrium prices. This is because a large part of the supply is linked to a state budget. Where normally the supply goes down when the oil price goes down, there are countries that in the past pumped more oil to realise the same yield.
Knowing that the final price is determined by the marginal buyer and the marginal seller, identifying these two parties is essential for predicting the oil price.