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Market Volatility
Energy price stabilization largely depends on sanctions
Przemek Nowak
Equity investment analyst
March 3, 2022

Russia’s military aggression against Ukraine, which has become Europe’s largest ground war in generations, has impacted millions of people and triggered a large-scale humanitarian crisis as vulnerable Ukrainians take shelter or flee their homes. The intensification and spread of the conflict is deeply troubling and is having a devastating impact on those people caught in the crisis.


This article focuses on potential market and economic implications of the conflict.


The current conflict has been pushing up global energy prices, but I would not go as far as arguing that they can now only keep going higher. Having said this, where we go on energy prices depends on the extent of U.S. and European sanctions against Russia. Importantly for the global energy complex, Russian oil and gas have been excluded from the sanctions for now. If this holds, it means we should expect some stabilization in oil and gas prices, although at higher levels.


Clearly, this is a very dynamic situation, and I would look for the following signposts as far as energy prices are concerned: One, further sanctions from the U.S. and Europe on Russian exports would imply higher prices in the short and medium term; and two, if we see Russia attain its strategic goals in the Ukraine, however those goals are defined, the sooner oil prices could decline to a more reasonable range of around $80–$90 per barrel. This assumes some “permanent” political risk premium.


Przemek Nowak is an equity investment analyst at Capital Group with research responsibility for energy and telecommunications in emerging markets, Latin America and EMEA, as well as emerging markets EMEA as a generalist and energy in Europe. He has 11 years of investment industry experience and has been with Capital Group for eight years. Earlier in his career he covered oil and gas in emerging markets.  Prior to joining Capital, Przemek worked as a research analyst at Nomura. Before that, he was a research analyst at Royal Bank of Scotland. He holds a master's degree in finance and accounting from the Warsaw School of Economics. He also holds the Certified Financial Analyst® designation. Przemek is based in London.

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