Commentary
During a webinar last week on
Ukraine, Russia, and U.S. Foreign Policy, a couple of expressed opinions drew a lot of attention. The first was that the conflict in Ukraine is likely to last somewhere between a couple of months and several years. The second was that western sanctions on Russia would have been more effective had they been applied prior to the start of the war. At this point, Vladimir Putin is committed to his course of action, and sanctions are unlikely to get him to back down now. This means that the United States is likely to be living with the effect of sanctions for an extended period, and the costs won’t be borne exclusively by Russia.
Oil Prices
We spoke with
Siddharth Singhai, the Chief Investment Officer at
Ironhold Capital, a firm that specializes in global value investing. He points out that Russia was the third largest oil producer in the world, accounting for 12 percent of global production. Pipelines to Germany are being shut down and failing financially. Some Russian pipelines run through Ukraine. Many shippers are refusing any Russian cargo including oil for fear that international sanctions, port regulations, or insurance provisions could change while in transit. While oil is a commodity, it is difficult to restructure distribution of that much product in any reasonable time-frame. With Russian production of 11 million barrels a day, the recent release of 60 million barrels from emergency stockpiles is nothing more than a gesture. Oil prices have already skyrocketed and are approaching all-time highs. Investors realize that much of the Russian oil supply may be stranded.
