Financial market reaction to 2008 South Ossetia war


Financial market reaction to 2008 South Ossetia war

AFP reported that unidentified analysts believed that Russian stock exchange declines in August/September 2008 were attributed to "a mix of falling energy prices, global market turmoil and political issues including worries over the war with Georgia." [ [http://afp.google.com/article/ALeqM5j8R4_3j96oTVQzSlJlqtZsZD9OPA Russian stock market still shut after plunge: market official] ]

Harvard B-School professor Noel Maurer sharply disagrees with the view that 2008 South Ossetia war had a substantial negative impact on Russian financial markets: "Russian indices were in decline well before the war started. If anything has happened since, it is that the decline has slowed. This is not consistent with the hypothesis that the markets are punishing Russia for the war." [ [http://http://noelmaurer.typepad.com/aab/2008/09/who-cares-about.html Who cares about Georgia? Not the markets.] ]

The Georgian financial markets also suffered negative consequences as Fitch Ratings lowered Georgia's sovereign debt ratings from BB- to B+, commenting that there are increased risks to Georgian sovereign creditworthiness. Standard and Poor's also lowered Georgia's sovereign credit rating. [cite news |last = Lesova |first = Polya |title = Fitch lowers Georgia's debt ratings to B+ |publisher = MarketWatch |date = August 8, 2008 |url = http://www.marketwatch.com/news/story/fitch-lowers-georgias-debt-ratings/story.aspx?guid={FA377F13-52F9-4AA2-A3C2-A57170314903}&dist=msr_2 |accessdate = 2008-08-10 ]


Baku-Supsa and Baku-Tbilisi-Ceyhan pipelines through Georgia
While Georgia has no significant oil or gas reserves on its own, it is an important transit route that supplies the West, and journalists expressed fear that the war may damage the Baku-Tbilisi-Ceyhan (BTC) pipeline, 30% of which is owned by BP. [cite news |last = Pagnamenta |first = Robin |title = Analysis: energy pipeline that supplies West threatened by war Georgia conflict |publisher = "The Times" |date = 2008-08-08 |url = http://www.timesonline.co.uk/tol/news/world/europe/article4484849.ece |accessdate = 2008-08-10 ] The BTC pipeline was shut down before the conflict because of the blast in Turkey on August 6, 2008, that was threatened and then claimed by the PPK [http://www.ogj.com/articles/article_display.cfm?ARTICLE_ID=336497] ' and the war created further problems for the operating company Botas International Ltd.cite news |last = Watkins |first = Eric |title = BTC export alternatives on hold as Russia, Georgia clash |publisher = Oil and Gas Journal|date = 2008-08-08 |url = http://www.ogj.com/display_article/336608/7/ONART/none/GenIn/1/BTC-export-alternatives-on-hold-as-Russia,-Georgia-clash/ |accessdate = 2008-08-10 ] Georgia claims Russia is targeting the pipeline. [cite news|url=http://www.reuters.com/article/GCA-Russia/idUSL961816420080809|title=Russian jets targeted major oil pipeline: Georgia|publisher=Reuters|date=2008-08-09|accessdate=2008-08-10] On August 8, 2008, Russian air forces devastated the port of Poti, which the Georgian government calls "a key port for the transportation of energy sources," close to the Baku-Supsa pipeline and the Supsa oil terminal.cite news|url = http://www.ft.com/cms/s/0/afb43a10-65a3-11dd-a352-0000779fd18c.html|title=UN row flares over Ossetian conflict
publisher="Financial Times"|date=2008-08-08|accessdate=2008-08-09
] On August 12, 2008, BP, an operator of the main pipelines through Georgia, closed the BTC pipeline, the Baku-Supsa Pipeline and the South Caucasus Pipeline for the safety reasons.cite news
url = http://www.upstreamonline.com/live/article160951.ece
title = BP shuts in Georgia links
publisher = Upstream Today
date = 2008-08-12
accessdate = 2008-08-13
] Gas supplies through the South Caucasus Pipeline were resumed on August 14, 2008.cite news
url = http://www.upstreamonline.com/live/article161060.ece
title = BP turns on Georgia gas taps
publisher = Upstream Today
date = 2008-08-14
accessdate = 2008-08-14
]

The price of oil was not negatively affected by these events, on August 8, 2008 light sweet crude for September delivery settled down $4.82 to $115.20 on the New York Mercantile Exchange. [ [http://money.cnn.com/2008/08/08/markets/oil/index.htm Oil sinks to 3-month low] , CNN, August 8, 2008]

References


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