Oil, LNG Prices May Rise Due to Russian-Ukraine CNG) is likely to rise sharply in the event of a Russia-Ukraine conflict which will be a negative for net energy importers, Moody’s Investors Service said on Monday. Tensions between Russia and Ukraine have intensified in the last few days resulting in a sharp spike in Brent crude price, which is nearing USD 100 mark. “The global price of oil and LNG is likely to rise sharply in the event of a conflict, which will be positive for the relatively few exporters in the Asia Pacific region and negative for the substantially greater number of net energy importers,” Moody’s Investors Service Managing Director Michael Taylor said.
However, a mitigating factor is that several Asian economies have long-term supply contracts in place for LNG which will limit the impact of fluctuations in the spot price, he said. Taylor further noted that trade effects are likely to arise from import diversion and diversification, although there may be opportunities for commodities producers in Central Asia to increase supply to China. “Supply chain bottlenecks would also be aggravated, adding to inflation pressures in the region,” he said. Besides, the financial market effects will have the largest near-term impact, he added.
“If a conflict gives rise to widespread risk aversion, funding conditions for high yield issuers, some of which are already experiencing constrained access to finance due to other factors, will deteriorate further,” Taylor said. He added that Chinese property developers would be particularly exposed to this risk given their large upcoming offshore debt maturities, although it is likely to apply to some degree to most high-yield issuers in the region.
