“Cutting energy supplies from Russia will lead to a sharp drop in consumer and business confidence, which, combined with Europe’s trade ties (both within its borders and globally), is likely to lead to an economic downturn. “Europe will increase the risk of a global recession.” “The investor climate is likely to worsen, leading to a sharp weakening of financing conditions and triggering asset price reductions on a large scale. “Credit margins will widen sharply and liquidity will be temporarily depleted, particularly affecting issuers with lower ratings, which will lead to a sharp rise in default.” Moody’s warned that an embargo would push oil prices to $ 160 a barrel this year, from $ 106.90 on Wednesday, while gas prices in Europe would rise “significantly” from already high levels and remain high for at least the next two years. Hungary, Slovakia and the Czech Republic are the most exposed to gas supply shocks. Germany, Austria, Italy and Greece are heavily dependent on Russian gas but also more economically viable, he added. The EU is trying to reduce its dependence on Kremlin gas without imposing a ban, outlining plans to cut demand by two-thirds before the end of the year. However, limited global supplies and already high prices are proving difficult to overcome. On Tuesday, Reuters reported that the EU was drafting proposals for an oil embargo on Russia, but said there was no agreement between Member States to do so. Many foreign ministers have expressed support for the move, but for others it would be an “asymmetric shock”, said top EU diplomat Josep Borrell. The US has banned Russian oil and Britain plans to do so by the end of the year, giving the industry time to replace about 8% of its total oil supply.
