Letter from South America: Ukraine crisis brings opportunities and costs

While the region’s crude producers stand to benefit from high prices, LNG importers will feel the pressure

Russia’s invasion of Ukraine has—probably more than any event apart from Covid—shown how interconnected the world is in the 21st century. And as we have seen, there are few industries more exposed to the volatility created by the conflict than oil and gas. The war also shows how reliant the world still is on hydrocarbons and highlights the nature of the industry’s low demand elasticity. The perceived threat to supply caused by sanctions—and potential sanctions—was enough to send prices soaring to heights not seen in the last 15 years. In Latin America, big oil producers such as Brazil will fill their coffers because of sustained higher prices. As the US, and even Europe, impose sanctions on