When the world’s largest energy producers and exporters face sanctions, financial markets don’t stay quiet. The Russia–Ukraine war and the restrictions on Russian energy exports made global markets more turbulent, confusing trade flows and changing investor expectations. This study looks at how different sectors, such as clean energy, fossil fuels, and metals, reacted to the crisis, questioning whether the turmoil created momentum for an accelerated energy transition or simply fueled market volatility.
To track these effects, the authors use an event study approach, analyzing abnormal returns (AR) and cumulative abnormal returns (CAR) over a 27-day window surrounding the invasion. The findings suggest that renewable energy companies saw an immediate surge in investor interest, reflecting the expectation that countries would double down on alternatives to Russian fossil fuels. Meanwhile, the response in conventional energy markets was mixed – while gas oil prices spiked, other fossil fuel segments showed inconsistent movements. In the metals sector, nickel prices soared in the days following the invasion, reflecting fears of supply shortages given Russia’s critical role in global exports. Platinum showed a negative abnormal return on the event day but displayed significant positive cumulative returns in the subsequent days.
The study highlights that investor responses to geopolitical shocks can be affected by behavioral biases, and emphasizes the need for governments and energy sector stakeholders to consider supply chain diversification, particularly in critical metals. Diversifying sources of critical metals will be key to ensuring stability in an increasingly uncertain global economy, as the study highlights the need for alternative supply options in response to geopolitical risks.
The paper’s policy section emphasises several main ideas. Authors suggest that governments should coordinate to end the conflict and curb the inflationary surge already visible in energy and metal prices. Investors are urged to stay alert to geopolitical developments and avoid overreaction to short-term events. Managers in energy- and metal-intensive industries should diversify input sources to shield themselves from similar shocks. Finally, while short-term investor behavior favored clean energy stocks, the study suggests this may reflect salience-driven overreaction rather than a definitive market-wide shift toward renewables. In light of this, policymakers and regulators are encouraged to accelerate the transition to sustainable energy by crafting supportive rules that strengthen clean-tech investment and critical-metal supply-chain resilience.
Read the full article.
