Russia’s invasion of Ukraine has sparked a domino effect of global economic consequences. This is worrisome to say the least—America is, after all, still recovering from supply and demand fluctuation caused by COVID-19. So what does the new incident mean for U.S. CRE?
Experts say the immediate impact from these events will likely be negligible, according to RCA Insights.
The recent report confirms that Russian capital has little presence in global markets, with outbound flows averaging only $330 million per year since 2017.
Effects might not be direct, but CRE is expected to feel the burn through increased energy prices, inflation, bond yields and economic growth. Most consequential? The U.S. is no longer importing Russian oil, liquified natural gas or coal, as of March 8.
It was found that Brent crude prices exceeded $100 a barrel for the first time in eight years post-initial invasion, and The Economic Times says developers have started to express concerns over upward pressure on input costs. Some raw materials, like cement and steel, might soon be unaffordable, making way for a potential wave of deadline disruptions.
That’s not the only impact of higher crude prices, either. Repercussions of COVID-19 are still at play, and though major pandemic-related concerns have subsided, according to The Economic Times, the imbalance between supply and demand continues to take a toll on many sectors of U.S. CRE. And that was before the news of February 24.
Analysts fear that, because of the halt in Russian energy exports—due to either prolonged conflict or another Western sanction—global energy markets could face a “supply shock,” according to a recent article in Forbes.
The most recent news, though, is more positive. As of March 14, U.S. Brent oil prices appear to be on the steady decline, after reaching $130 March 9, following Biden’s announcement. WTI is also at its lowest since then, at $98.
