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Exploring the risk and economic vulnerability of global energy supply chain interruption in the context of Russo-Ukrainian war

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  • Cui, Lianbiao
  • Yue, Suyun
  • Nghiem, Xuan-Hoa
  • Duan, Mei

Abstract

The Russo-Ukrainian war intensified the risk of global energy supply chain disruption, causing not only sharp fluctuations in energy prices in a short period of time but also disruptions to the global energy supply and economic and trade orders, with profound effects on global political and economic patterns in the long term. To explore the macroeconomic impact of the energy interruption caused by the Russo-Ukrainian war, a global multi-regional, multi-sector computable general equilibrium model was used for the empirical analysis. The results show that trade interruption alone would significantly impact the Ukrainian economy, causing its real GDP to fall by 4.18%. However, if the United States (US) and the Europe Union (EU) stop importing energy from Russia, the latter's economy will suffer a devastating blow, with a maximum decline in its real GDP reaching 5.49%. Developed countries are likely to incur heavy economic costs owing to their energy sanctions imposed against Russia. However, these costs are mainly borne by European nations, whereas the US suffers limited economic losses. Moreover, the Russo-Ukrainian war has limited impacts on global carbon abatement. In the strictest scenario, global energy consumption and carbon emissions will decrease by 0.600% and 0.915%, respectively. Exploring the boundary effects of the Russo-Ukrainian war on economic growth, energy consumption, and carbon emissions is useful for understanding the complex relationship between geopolitical conflicts, natural resource utilization, and carbon emissions.

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  • Cui, Lianbiao & Yue, Suyun & Nghiem, Xuan-Hoa & Duan, Mei, 2023. "Exploring the risk and economic vulnerability of global energy supply chain interruption in the context of Russo-Ukrainian war," Resources Policy, Elsevier, vol. 81(C).
    • Handle: RePEc:eee:jrpoli:v:81:y:2023:i:c:s0301420723000818
    DOI: 10.1016/j.resourpol.2023.103373
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    14. Conlon, Thomas & Corbet, Shaen & Goodell, John W. & Hou, Yang (Greg) & Oxley, Les, 2024. "Financial market information flows when counteracting rogue states: The indirect effects of targeted sanction packages," Journal of Economic Behavior & Organization, Elsevier, vol. 217(C), pages 32-62.
    15. Rivera-Alonso, David & Iglesias, Emma M., 2024. "Is the Chinese crude oil spot price a good hedging tool for other crude oil prices, and in special for the main Russian oil benchmarks and during international sanctions?," Resources Policy, Elsevier, vol. 90(C).
    16. Assaf, Rima & Gupta, Deeksha & Kumar, Rahul, 2023. "The price of war: Effect of the Russia-Ukraine war on the global financial market," The Journal of Economic Asymmetries, Elsevier, vol. 28(C).
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    19. Stelian Stancu & Anca Maria Hristea & Camelia Kailani & Denisa Elena Bala & Andreea Pernici, 2023. "Adoption of Voluntary Measures for Reducing Electricity Consumption in the REPowerEU Plan Context: A Romanian Consumer Perspective," The AMFITEATRU ECONOMIC journal, Academy of Economic Studies - Bucharest, Romania, vol. 25(64), pages 760-760, August.
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    21. Tse, Ying Kei & Dong, Kyra & Sun, Ruiqing & Mason, Robert, 2024. "Recovering from geopolitical risk: An event study of Huawei's semiconductor supply chain," International Journal of Production Economics, Elsevier, vol. 275(C).
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    More about this item

    Keywords

    Russo-Ukrainian war; Energy trade; Carbon emissions; Economic vulnerability; Computable general equilibrium model;
    All these keywords.

    JEL classification:

    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • F17 - International Economics - - Trade - - - Trade Forecasting and Simulation
    • C68 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Computable General Equilibrium Models
    • Q53 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Air Pollution; Water Pollution; Noise; Hazardous Waste; Solid Waste; Recycling

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