Little Short-Term Impact From New Sanctions

BMI View: The new sanctions introduced by the US on Russia will have no significant impact on ongoing oil and gas operations. However, the growing divide between Russia and the US and EU, will push the country further east, increasing its dependency on China for finance and technology.

The US has further raised its package of economic sanctions on Russia due to Moscow's continued refusal to play a role in reining in rebels in eastern Ukraine. The US reported that on July 16 2014, around 11,000 Russian troops returned to the Ukrainian border and that weaponry was crossing into eastern Ukraine. The tragic crash of flight MH17 on July 17 has only worsened this situation.

The new set of sanctions imposed by the US is mainly designed to restrict the access of Russian companies from medium and long-term US capital markets ( see 'US Sanctions No Threat To Russia's Trade', July 17). Any new debt issued by Russian companies subject to sanctions will not be qualified on JPMorgan bond indexes. These are the most widely used emerging market debt indexes.

Russia Oil And Gas Production (000b/d, bcm)

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Related sectors of this article: Oil & Gas, Projects, Energy Policy
Geography: Russia, China, United States

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