Commodities | EEMEA | Monetary Policy & Inflation | US
Ukraine Conflict Could Trigger Oil Shock and Global Recession
- By Dominique Dwor-Frecaut
- 4 min read
Summary
• Russia’s global financial footprint is limited, but large in commodities markets.
• The biggest risk from the invasion of Ukraine is a commodities price shock, which could see oil prices rise above their 2008 high.
• A commodities shock could cause a global recession: it would transfer income from commodities importers to exporters, and the latter tend to save more.
• Also, with inflation already high and central banks concerned over the risk of expectations de-anchoring, they would likely tighten in response to the shock.
• In Europe, large infrastructure and defence spending would increase resource pressures.
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