KBRA Releases Research: European Corporates: Muted Impact of Geopolitical Tensions on Energy, so Far
22 Feb 2024 | Dublin
KBRA Europe releases a research report on the impact of geopolitical tensions on European corporations and energy markets. Rising geopolitical tensions pose indirect risks for corporate profitability and inflation in Europe via their potential impact on energy prices, transportation costs, and feedthrough into broader macroeconomic conditions. To date, the impact of the events in Ukraine and the Middle East and the ongoing risk of escalation have had a relatively mild influence on commodity prices. In contrast, shipping costs have experienced more volatility, and their impact on corporate profitability will largely depend on the current tensions being sustained. Despite a deterioration in terms of geopolitics, global economic forecasts and sentiment have improved, and energy prices have broadly remained range-bound. However, the risk of an increased impact remains high.
Key Takeaways
- Geopolitical risks remain elevated.
- Energy prices have not been dramatically impacted by the Israel-Hamas war and the recent Red Sea troubles owing to a number of reasons, such as the limited disruption to global supplies and muted demand.
- Shipping costs have endured the impact of the Middle East conflicts. While these have yet to have a major impact on European corporate input costs to date, there remains a significant risk that cost pressures will intensify should an already tense environment escalate.
Click here to view the report.