INSUBCONTINENT EXCLUSIVE:
Oil and LNG prices are likely to see a sharp rise in case of Russia-Ukraine conflict, says Moody's New Delhi: International oil and
implications for net energy importers, Moody's Investors Service said on Wednesday.Moody's Investors Service Managing Director Michael
Taylor said trade effects are likely to arise from import diversion and diversification, although there may be opportunities for commodities
producers in Central Asia to increase supply to China
Supply chain bottlenecks will also be aggravated, adding to inflation pressures in the region.Tensions have been escalating between Ukraine
and Russia in recent weeks, and on Monday Moscow decided to recognise two separatist regions of eastern Ukraine as independent and deployed
Russian troops there."The global price of oil and liquified natural gas (LNG) is likely to rise sharply in the event of a conflict, which
will be positive for the relatively few exporters in the Asia Pacific region and negative for the substantially greater number of net energy
importers."However, a mitigating factor is that several Asian economies have long-term supply contracts in place for LNG, which will limit
the impact of fluctuations in the spot price," Mr Taylor said.Global crude oil benchmark Brent neared the $100 per barrel on Tuesday amid
rising threat of invasion in Ukraine and fears of sanctions on Russia, the largest exporter of natural gas and second-largest oil
exporter.India imports about 85 per cent of its crude oil needs and about half of its natural gas requirement
While the imported crude oil is turned into fuels such as petrol and diesel, gas is used as compressed natural gas (CNG) in automobiles and
fuel in factories.In a statement, Moody's said its rated issuers in the Asia-Pacific (APAC) have limited direct exposure to Russian or
Nonetheless, issuers in APAC may not be immune to second-round effects of a conflict
Among the possible transmission channels are commodities prices, trade effects and financial market disruption."Financial market effects
will have the largest near-term impact: for example, if a conflict gives rise to widespread risk aversion, funding conditions for high yield
issuers, some of which are already experiencing constrained access to finance due to other factors, will deteriorate further," Moody's
