Russia’s February 24th invasion of Ukraine provoked a global uproar, and nearly simultaneously, a robust and immediate response. Leaders of countries, organizations, and firms not only condemned the death and devastation wrought by Russia on Ukraine, a neighbor that has been independent since 1991. Led by the EU and US, countries followed up with a blizzard of sanctions and boycotts on Russia, alongside diplomatic support and shipments of aid and weapons to Ukraine.
While initial state-issued sanctions avoided direct targeting of Russian energy exports, private sector
reluctance to do business in an uncertain and rapidly-changing environment is reducing Russia’s
participation in global oil and gas markets in any number of ways, with repercussions occurring over the short and longer-term. Despite the intention of the U.S. and EU to avoid a sanction-induced energy shock to the global economy by allowing exports of oil and natural gas sanction-free, global oil prices have risen substantially as have natural gas prices in Europe and the Far East.
Ultimately, the invasion threatens to undermine Russia’s longer-term position as the world’s No. 2 oil
producer and exporter.
With oil being by far the world’s leading source of energy, Russia is a crucial cog in the global economy.
It has long been understood that Russia’s status as a major oil and gas exporter—and a major nuclear
weapons state—insulated it from serious reprisals over Moscow’s aggressive foreign policy. After
February 24th, however, widespread perceptions held that Moscow had gone too far. The harm caused by Russia’s invasion was being weighed against the important contributions of Russian energy exports to the world economy.

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