The Oil Market After The War

The Oil Market After The War

TOPSHOT - Ukrainian servicemen get ready to repel an attack in Ukraine's Lugansk region. (Photo by ... [+] Anatolii STEPANOV / AFP) (Photo by ANATOLII STEPANOV/AFP via Getty Images) Naturally, the war in Ukraine and its impact on Russian oil flows is the dominant factor in today's oil market, but few wars last forever. It is possible that Putin will declare victory and leave in the near future, but equally possible that the conflict will revert to pre-invasion status, that is, continuing but low-level fighting in eastern Ukraine. Aside from these unknowns (or at least, known only to Putin), there are a number of salient facts that need to be considered but are often overlooked. The most important thing, a lesson that never seems to penetrate the public mind, is that transients are temporary and many factors will revert to pre-crisis behavior at some point. First, sanctions: Russian oil and gas have not been put under sanctions by any major consumers; the biggest impact has come from companies that have voluntarily ceased purchases primarily of oil. Some combination of lower violence and/or crisis fatigue will certainly result in a quiet resumption of purchases, which will lessen pressure on the market