But at the same time, a spike in oil prices would drive coal and liquefied natural gas (LNG) prices higher as buyers seek energy substitutes. As a major exporter of both, Australia would benefit from this increase.
“There can be winners and losers, but on a global level [an invasion] may not have much impact on the economy,” Mr. Ticehurst said.
Australian commodity exporters would be among the winners. Besides energy substitutes, producers of safe-haven assets such as gold are usually the beneficiaries of geopolitical uncertainty.
A flight of capital to safe havens such as the United States would also lower the Australian dollar. This would be good for resource companies repatriating earnings, but it would also add upward pressure on market inflation.
Analysts said the uncertainty of the situation on the Russian border made it difficult to predict flow effects, but there were certainly plausible scenarios where military action led to a global energy supply shock.
For many, the greatest uncertainty is what, if any, domestic sanctions are being imposed on Russia and how the Kremlin would respond.
“You want to make sure the sanctions don’t hurt you more than they hurt Russia,” said Vivek Dhar, commodities analyst at Commonwealth Bank, noting that Russia would likely retaliate to any domestic sanctions.
Russia ships around 250,000 barrels of oil a day, or 0.25% of the world’s supply, via Ukraine. More broadly, Russia accounts for around 8% of world supply, after deduction of production for domestic use, which makes it the world’s third largest producer.
The International Energy Agency on Friday called the likelihood of national sanctions “low”. But in its oil market report, the IEA also said global oil balance sheets were much tighter than previously thought.
“OPEC+ chronic underperformance [the global cartel of oil producing nations] in meeting its production targets and rising geopolitical tensions have propelled oil prices higher,” the IEA said.
Dhar said global oil inventories and limited OPEC+ spare capacity suggested that oil markets were more vulnerable to supply shocks, and that the “main supply shock in the minds of the market “was Ukraine.
From a monetary policy perspective, Mr Ticehurst said the RBA would likely look at short-term price impacts, although BetaShares chief economist David Bassanese warned that prolonged higher prices would be hard to ignore.
“If oil prices go above $100 a barrel and stay there, that would be an additional shock to consumer spending,” he said. “If this is a negative supply shock in the 1970s, it will be very difficult for central banks to ignore it.
“Depending on the length of this period, this could tip the global economy into recession.”