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Access the interactive webinar replay from S&P Global Ratings to hear its analysts and Global Chief Economist's views about the impact of the Russia-Ukraine military conflict and its ripple effect on ratings and the global economy.


Europe’s Energy Supply

Ukraine Conflict Boosts Europe's Clean Energy Ambition Amid Headwinds

Europe has pledged a rapid transition away from Russian fossil fuels in response to the war in Ukraine, raising already-ambitious decarbonization goals in a concerted effort to end dependence on Russian gas by 2027.

Russian Hydrocarbons Output, Exports to Drop Significantly Following Ukraine Invasion

The Russian Economy Ministry forecasts Russian hydrocarbons output and exports to drop significantly in 2022, as Russian energy producers grapple with the impact of the invasion of Ukraine and western sanctions. The ministry's forecasts reflect how the consequences of the invasion are reshaping the Russian energy sector.


EU Considering Removal of All Trade Barriers to Ukraine Exports

To help boost war-ravaged Ukraine's exports to the EU, the European Commission proposed April 27 to suspend for one year its import duties on all Ukrainian exports to the bloc, it said on its website. The proposal would also see the suspension for one year of all EU anti-dumping and safeguard measures in place on Ukrainian steel exports.


EC President Warns Of 'High Risk' for Companies Agreeing to Russian Gas Payment Demands

European Commission President Ursula von der Leyen warned April 27 of the "high risk" to EU companies that agree to new Russian gas payment demands, which she said were in breach of EU sanctions.


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Financial Market Pressures

Ukrainian Banks Evaluate Impact of Russia War as Provisions Surge, Profits Sink

Ukraine's banking sector recorded consecutive months of deep losses and elevated provisions for bad loans as the impact of Russia's invasion on the country's lenders becomes increasingly clear.

Aggregate profitability in the sector fell to a loss of 7.27 billion hryvnia in April from a profit of 7.15 billion hryvnia in January, the latest data from the Ukrainian central bank shows. Return on equity fell to negative 9.46% from 33.3% over the same period, while loan loss provisions rose to 15.86 billion hryvnia in March from 1.58 billion hryvnia in January, with a further 11.17 billion hryvnia added in April.

Ukrainian banks are maintaining their day-to-day operations where possible, but the conflict is negatively affecting business and household income, said Vitaliy Vavryshchuk, head of macro research at asset manager Investment Capital Ukraine. This could make it difficult for borrowers to keep up with loan repayments, Vavryshchuk said.

"The key risk is impairment of the loan portfolio. The most likely scenario is that nearly all corporate and retail loans in the territories that are still occupied will be lost," Vavryshchuk said. Destruction of tangible assets due to missile strikes and shelling was another source of losses, Vavryshchuk said.

Damage assessment

The central bank has implemented a nationwide moratorium on loan repayments to help borrowers, but it still wants banks to properly measure and report their asset quality, a spokesperson for the bank told S&P Global Market Intelligence via email. "Without grasping the full scale of the damage, we will not be able to implement an effective rehabilitation of the banking system post-war," the central bank said.

Total loans in the Ukrainian banking system amounted to 1.1 trillion hryvnia as of the end of March. The nonperforming loan, or NPL, ratio for the sector stood at 27.1%, slightly up from the February level of 26.6%, which was the lowest NPL level for the sector since 2017. Because loans are only classified as nonperforming once payments are more than 90 days overdue, the full extent of NPL exposure is not yet known.

Russian Financial System Increasingly Backed by Commodity Collateral as Default Looms

Russia will increasingly use barter and specific currency transactions for energy supplies, an S&P Global Commodity Insights analyst said May 24, as a default looms for billions of dollars in foreign currency reserves if the U.S. allows a key waiver to expire May 25.


G20 Members’ Views on Russia Diverge, Making Expulsion Unlikely

Russia's expulsion from the G20 is unlikely, with most members either against removing Russia from the group or undecided on the matter.


Subnational Economic Spill Over Effects After Russia’s Invasion in Ukraine

Russia's invasion of Ukraine has caused several spill over effects, which for European economies are having an uneven impact at both the country and the subnational level.


The Russia-Ukraine Conflict: Beyond the Nearer-Term Implications

With the invasion of Ukraine on 24 February, Europe's security environment, Ukraine and Russia's economic outlook, the stability of markets have been thrown into the air and are in the process of reshuffling.


EU's Russian Ships Insurance Ban to Distort Commodities Trade: Sources

The European Union's ban on insurance and reinsurance of Russian ships is expected to further complicate trade in dry bulk and liquid commodities with Russia.


The Russian invasion of Ukraine has not only initiated a global humanitarian crisis, it’s given rise to greater risk exposures in capital flows, trade and commodity markets worldwide. Our experts are sensitive to the effect of the conflict on global economies as well as its impact on our community in deep and varied ways.


China's Evolving Role

China (Mainland) May Move to Limit Impact of U.S. Financial Weapons

The weaponization of the US dollar against Russia after its invasion of Ukraine has raised expectations that Beijing will accelerate its de-dollarization efforts, to protect against similar financial sanctions that Washington could deploy against China (mainland). While the Chinese renminbi (RMB) is unlikely to dethrone the US dollar in the global financial system soon, concerns remain that the dollar's weaponization against Russia has initiated an irreversible fracturing of the global financial system that will result in two international monetary systems, one led by the United States and one by China.

Markets Brace for Oil, Gas Demand Destruction as China Pursues Zero-COVID Policy

China's ongoing COVID crisis is one of the key events driving commodity markets.

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Key China-Russia Oil and Gas Deals, Joint Projects and Energy Investments

Energy supply diversification to China has been at the core of Russia's eastern pivot, while Russian gas is central to China's energy diversification away from the Middle East and Australia.


Low-Priced Russian Urals Crude Cargoes Attract Chinese Buyers for June Deliveries

Several Chinese state-owned refiners have returned to the Russian spot market to buy May-loading Urals crude barrels, attracted by their record discount to Dated Brent, refining sources told S&P Global Commodity Insights March 22.


Sanctions Against Russia

New Iran Sanctions Prompt China Independents to Expand Focus on Russian Crude

China's independent refiners may aim to keep potential risk at bay and refrain from taking Iranian barrels in the near term following a new set of sanctions imposed by US authorities, as plentiful availability of discounted Russian cargoes and robust domestic stocks will make it easier to fill the vacuum.

With China's independent refineries in Shandong set to resume taking Russian Urals -- the first cargo since November 2021 arriving in early-June and at least eight more later in the month -- trade sources said refiners have started to weigh the risk associated with Iranian oil with attractively-priced Russian cargoes.

"It has become difficult to sell the Iranian barrels compared with a week ago. We have heard some cargoes have been stored at Shandong ports without finding a buyer," a trading source with knowledge about the matter said.

US authorities announced May 25 new sanctions on several individuals and entities involved in an international oil smuggling and money laundering network that has allowed Iran to skirt oil sanctions.

According to a release by US Department of the Treasury, sanctions for purchasing Iranian oil were extended to Hong Kong-based energy company China Haokun Energy, a subsidiary of Beijing-based Haokun Energy Group, as well as China's Fujie Petrochemical Zhoushan, a subsidiary of a joint venture between Iranian and Chinese energy companies called PetroChina Pars, which was also sanctioned. China's Shandong Sea Right Petrochemical was added to the sanctions list of Treasury's Office of Foreign Assets Control.

EU Publishes Sixth Sanctions Package, Including Oil Import Restrictions

The EU published details of its sixth sanctions package against Russia June 3, including phasing out Russian crude imports in 6 months, and other refined products in 8 months.

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Russian Foreign Ministry Says EU Oil Sanctions Will Lead to Further Price Rises

The Russian Foreign Ministry said June 2 that the latest EU sanctions restricting imports of Russian oil and banning shipping insurance, will lead to further price rises.

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Maritime and Trade Talk - The Impact of Russia’s Invasion of Ukraine: A Trade Finance Compliance Perspective

In response to Russia's invasion of Ukraine, governments and regulators have enforced stringent sanctions in key strategic industries.


Sanctions Fear Fails to Stem Russian Oil Sales as Price Discounts Lure Buyers

Russia's seaborne exports of crude oil continue to flow into world markets at post-pandemic highs as price discounts lure buyers despite the fear of wider sanctions aimed at crimping the Kremlin's cash cow, according to analysis of tanker traffic.

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In response to Russia’s invasion of Ukraine, S&P Global Ratings continues to assess the effect on economies, markets, and credit.


Effects on Oil

EU Agrees Compromise Deal to Ban 90% of Russian Oil Imports by Year End

EU leaders agreed a compromise deal to ban Russian oil imports by sea late May 30 in a move set to phase out almost 90% of Russian oil imports into the trade bloc by year-end and trigger a major upheaval in global oil trade.

Following weeks of negotiations over the EU's latest Russian sanctions plans, land-locked Hungary finally accepted an exclusion for access to Russian crude via the Druzhba pipeline.

First proposed on May 4, the EU's sixth sanctions package against Russia was designed to ban its crude imports into the bloc within six months and halt flows of its oil products by the year-end to help hit Moscow's oil revenues.

EU Council President Charles Michel said in a Tweet the new sanctions will immediately impact 75% of Russian oil imports.

Russia-Ukraine War Boosts Azeri Crude Transit, But Production is Limping Along

Azerbaijan is benefiting from the EU's pivot away from Russian energy, boosting oil transit shipments and enjoying higher prices for its own crude, according to market sources and data from S&P Global Commodity Insights.

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South Korea on Track to Phase out Russian Crude Imports Amid Ample U.S., Saudi Supplies

South Korea is on track to phase out Russian crude imports as domestic refiners boost US and Saudi purchases to meet high operation rates, leading the world's fourth biggest crude importer to cut April shipments from the non-OPEC producer by around half, industry participants said.


Japan, U.S. Back 'Initiative' to Help Asia Wean Itself Off Russian Energy

Japanese Prime Minister Fumio Kishida and the US President Joe Biden agreed May 23 to explore "an initiative" to help reduce Asian countries' dependency on Russian energy.


For Asia-Pacific, the biggest risk of the Ukraine conflict is market volatility and higher commodity prices; emerging economies with large energy imports are most at risk.


Implications for Gas

Russian Gas Phaseout and the Future of Europe’s Power Generation

Russia's invasion of Ukraine has triggered a shift in European power production sources and forced the governments to rethink their long-term energy policies.

The European Union is now on track to reduce reliance on Russian gas sharply before eliminating it entirely. Yet, with coal and nuclear phaseouts taking place across Europe – Germany will close its remaining reactors in December and will get rid of all coal by 2030 – natural gas was expected to play a key role in energy transition.

Russian gas flows account for about 40% of all European imports. And there are doubts on whether gas has a future as bridge generation fuel between high-carbon intensity fuels and green energy.

In recent months, coal – the most carbon-intensive fuel – has been having a so-called "renaissance" period to address reduced gas availability. The European Commission said coal burn could rise some 5% above previous expectations over the next five to 10 years. Yet this could only be a short-term solution.

Glenn Rickson, head of European Power Analysis at S&P Global Commodity Insights, expects gas generation to play "a leading role and a leading price setting role in European power markets for many years to come".

That said, the events of the last few months will inevitably have a profound impact on Europe's energy sector.

Serbia's President Says Agrees to New 3-Year Gas Deal with Russia

Serbian President Aleksandar Vucic said May 29 that a new three-year natural gas supply deal has been agreed with Russia, Serbia's Beta news agency reported.


EC, U.S. reaffirm urgency for 'decisive' action to reduce Russian imports

The European Commission and the US reaffirmed May 24 the need to take "decisive" action to cut Russian energy imports and slammed the latest move by Moscow to use energy as a weapon after it cut supplies to Finland.


Russia's Gazprom Suspends Gas Supplies to Finland's Gasum

Russia's Gazprom suspended natural gas supplies to Gasum on May 21 after the Finnish company refused to pay for Russian gas in rubles, the two companies said in separate statements.


Russian Gas Flows into Europe Dip in April as Ukraine War Rumbles On

Physical Russian gas flows into Europe dropped back in April compared with the previous month, an analysis of flow data from S&P Global Commodity Insights showed May 6, but supply remained above January and February levels as the war in Ukraine rumbled on.


Following Russia's invasion of Ukraine, S&P Global Commodity Insights looks at the impacts on commodity and energy markets in the region and the world at large.


Impact on Metals & Chemicals

‘Interesting Times’ Likely Now the Norm for U.S. Metals Markets

Whoever first uttered the expression "May you live in interesting times" must surely have envisioned today's U.S. metals markets.

The saying — part blessing, part curse — is an apt summation of current times. From pig iron to nickel, aluminum to steel, U.S. pricing has soared once again on geopolitical events, supply chain strains, and overall uncertainty.

Just as domestic markets began to stabilize from record price increases in 2021 and the economy was coming to terms with the realities of a post-pandemic world, inflation bit hard in the first quarter of 2022, Russia invaded Ukraine and a new COVID-19 variant emerged.

The combination of factors is roiling markets. Russia and Ukraine's conflict has had the most far-reaching impact.

The two countries accounted for about 62% of American pig iron imports in 2021, and the war has removed significant supply of the key electric-arc furnace steel feedstock for U.S.-based steelmakers and global producers alike. About 70% of U.S. steelmaking is EAF based.

U.S. buyers have had to look to replace Russian and Ukrainian material since the February invasion, with Brazil picking up the bulk of that business. S&P Global Commodity Insights' Platts Brazilian pig iron export assessment nearly doubled from January to mid-March, topping $950/mt in early April.

In turn, Platts CIF New Orleans pig iron price assessment rose about 91% by mid-March — reaching $1,030/mt, the highest level since S&P Global began assessing it in January 2018. The weekly US pig iron import assessment is now down $90 from the recent peak but still elevated.

U.S. Suspends Tariffs on Steel Imports from Ukraine

The U.S. on May 9 suspended for one year its 25% Section 232 tariffs on steel imports from Ukraine, noting the importance of that industry to Ukraine's economy as the country continues to defend itself against Russia.


U.S. Steel Shifts Raw Materials, Continues U.S. Pig Iron Build Out Amid Russia-Ukraine Conflict

U.S. Steel is continuing to focus on increasing its U.S. pig iron supply, while shifting its raw materials mix domestically and in Europe amid the ongoing war in Ukraine, company executives said April 29.


Japan Companies Accelerate Move to Replace Russia Coal with Australian Supply, Others

Japanese utilities and manufacturers are stepping up efforts to seek alternative supplies to Russian coal from Australia, Indonesia and Vietnam, among others.


ArcelorMittal Cuts 2022 Global Steel Consumption Outlook Because of Ukrainian War

ArcelorMittal expects 2022 global steel consumption to contract 0%-1% as Russia's military invasion of Ukraine disrupts supply chains, stoking inflation, while China's COVID-19 lockdowns dampen economic activity, the world's second biggest steelmaker said May 5.



Food Inflation Hits All-Time High, Fuels Security Risks

Russia's war on Ukraine has pushed food and energy prices to fresh highs, triggering food security concerns and putting pressure on households worldwide.

Food supply chains are being forced to reroute at great cost as major importers of grains and oilseeds look to cover for stoppages of essential food exports from the Black Sea ports. Global food prices hit their highest level in March since 1990, when the UN's Food and Agriculture Organization started recording this data.

Historically, food inflation saps purchasing power of people and forces governments to tackle supply risks and take measures such as export restrictions, which further aggravate demand-supply imbalances. A similar situation is currently in the play.

Food prices are expected to remain elevated for multiple seasons and buyers should be prepared to pay higher prices for imports, FAO Economist Monika Tothova recently told S&P Global Commodity Insights.

Surging Freight Rates Stifle Sunflower Oil Exports from Ukraine, Russia

The cost of freight for sunflower oil shipments has soared to record highs, market sources said May 27, as Russia's prolonged blockage of Ukraine's Black Sea ports continues to stifle the export market.


Russia Lowers Export Tax on Wheat to $114.3/mt; First Cut Since March

Russia's agriculture ministry on May 6 set the variable export tax on wheat at $114.30/mt for the May 13-17 period, down $5.80 from the May 6-12 previous period, the first reduction in the export tax since March 16.


First Cargo of Ukrainian Corn Since Start of War Loaded in Romanian Port: Ukrlandfarming

The first cargo of Ukrainian corn since the Russian invasion of that country on Feb. 24 has been loaded for export in Romania, Ukrlandfarming, the company loading and selling the grain, said April 28.


Historically High Food Prices Here to Stay, Says FAO Economist

The historically high food and agriculture commodity prices are likely to sustain for multiple upcoming seasons driven by various factors.


As the Russia-Ukraine military conflict rages on, S&P Global Market Intelligence Insights reports on how geopolitical factors and market volatility issues are affecting businesses across all industries at the local, regional, and global levels.