“Businesses are asking themselves, ‘Do I want to continue with something where I don’t know if a contract I sign today can be executed weeks or months in the future,'” said Josh Lipsky, director of the GeoEconomics Center at the Atlantic Council, an international think tank. “The overall distress in Russian financial system makes it too uncertain. Businesses hate uncertainty. This is uncertainty on steroids.”
Still, Lipsky said, the large number of businesses pulling out of Russia is unusual, even for a crisis like this.
“Generally, if there’s opportunities to make money, they’ll continue to invest in a market,” he said. “But there’s a consensus that it’s not appropriate to be selling these products. That’s an interesting dynamic I haven’t seen before.”
Even the Kremlin is acknowledging that the businesses actions of companies across the globe are creating an economic crisis for its economy.
“There are alternatives,” said Lipsky. “Companies are able to find those other markets and trading partners and meet all those fiduciary requirements to their shareholders. They’ve made the decision that Russia is not worth the risk.”
The aversion to risk is clear in energy trading. Sanctions by numerous western countries have so far exempted Russia’s oil sector, in hopes of preventing shortages and price spikes in global energy markets.
Finding oil tankers to call on Russian ports has been difficult — as have insurance companies willing to insure the ships and shipments. All this has created what oil analyst Andy Lipow of Lipow Oil characterized as a “de facto ban” on Russian oil.
— Mark Thompson, Vasco Cotovio, Peter Valdes-Dapena, Frank Pallotta and Brian Fung contributed to this report
