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Risk of recession as oil prices rise?

March 21, 2022
clock 6 MIN READ

Russia is the world’s largest oil exporter and the second-largest crude oil exporter1, and Ukraine is a key transit country for Russian exports to Europe2. For both countries, mineral fuels (coal, petroleum, and natural gas) are the largest export category. Despite a relatively small percent of Russian oil exports reaching the U.S., the commodity is a global product. A lower global supply drives prices higher everywhere as countries that depend on the Russian supply chain look elsewhere to import. A large percent of the European Union’s total energy imports comes from Russia—close to 40% of its coal and refined petroleum, and around 25% of its crude oil and natural gas.

From the start of the invasion on February 24 through March 8, the price of crude oil rose over 30%—a gain of almost 100% for the previous 12 months according to Bloomberg. Despite retreating some over the last few days, an extended period of lower Russian supply could intensify the concern for higher prices.

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1https://www.iea.org/reports/russian-supplies-to-global-energy-markets/oil-market-and-russian-supply-2
2https://www.iea.org/countries/ukraine

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