The politically-sensitive Euro may wilt if tensions between Russia and Ukraine spill over into Europe. Will traders then look for refuge in the anti-risk Swiss Franc? Get your market update from DimitriZabelin here:
may ride the wave of politically-induced supply disruptions if economic sanctions are put in place against Russia. This would buttress what has been an increasingly-bullish outlook for these key inputs amid revived global demand. What then are the political variables that could support or derail this outlook for the Euro, Swiss Franc, and crude oil?PLAYING WITH FIRE: NORD STREAM 2
The Nord Stream 2 pipeline continues to be a political and economic wedge between the US and its European allies. For Washington, there is concern that it could give Moscow undue leverage over Germany’s economy and that of the region as a whole. As a result, it could make European foreign policy towards Russia softer and weaken US endeavors.On the other hand, Germany and Europe as a whole continue to wrestle with soaring energy prices.
Poland and the Ukraine are also expressing unease about missing out on collecting transit fees from allowing Russian gas to flow through their territories. According to the, prior to the completion of Nord Stream 1, “about 80% of Russia’s natural gas exports to Europe transited Ukraine. In 2019, about 45% of these exports transited Ukraine”.
While the pipeline is complete, operational certification has not yet been issued. Having said that, analysts expect regulators to approve a license between March and July of 2022. Washington has openly said it could leverage sanctions against Russia if Moscow sends troops over Ukraine’s border, and some of them target Nord Stream 2:
“Section 232 of the Countering Russian Influence in Europe and Eurasia Act of 2017 authorizes sanctions on those who invest at least $1 million, or $5 million over 12 months, or provide goods, services, or support valued at the same amount for the construction of Russian energy export pipelines ” -US sanctions could trigger counter-measures by Russia in the form of restricted supply of gas and oil, potentially causing a spike in energy prices and further fanning the flames of inflation.
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