Two myths about the Ukrainian conflict
Myth # 1: Those who believe that Putin's actions with respect to Ukraine could hurt Russia economically should think again. Global tensions have generally been good for Russia and the current situation is no exception. Russia is not afraid of US administration's sanctions threats. More dollars are about to start flowing to Putin and his friends (see story).
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| Brent oil futures (source: Investing.com) |
Myth # 2: Similarly those who don't believe that the Ukrainian conflict will have a major impact on the US (see story) may want to rethink their position. Ignoring these major geopolitical developments just because Ukraine doesn't have a direct economic link to North America is shortsighted.
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| US gasoline futures (source Barchart) |
Both arguments you presented are very shallow. Doesn't the price jump reflect concerns for supply disruption? Either those concerns recede and price normalizes, or the disruptions do occur, revenue goes down and more money is spent dealing with the reason this disruption has occurred.
Even assuming that price is realized and supply/demand remain the same: Russia produces ~10m barrels per day, roughly half is exported, so in best case scenario that's 10^73650.5*2 = 3.65b in extra profits per year. For comparison, over ~100b was wiped from the equity market in a matter of days. With companies like Gazprom (10% of market) trading at ~2 P/E we can almost compare stock with flow.
There is obviously more to economy than oil export and equity market to come to conclusion about economic growth (every 20b lost is 1% of GDP lost), but my personal take is everything will normalize within 2 months.
Likewise, gasoline price wouldn't be a dealbreaker. With 140b gallons consumed per year, 2.945 to 3.01 is 9b, 0.06% of GDP. Afghanistan campaign averaged at 40b a year.
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