Integrated Oils Russia Risk Low; Total and BP Most Exposed, Chevron One of Least Exposed

Integrated oils have been dealing with sanctions on Russia for some time as many of those imposed from the 2014 annexation of Crimea remain in place. While they have had little impact, the Russian invasion of Ukraine is likely to spur a new round of sanctions that are perhaps more punitive. As we wrote in our Feb 23. note, however, we think sanctions that disrupt the flow of oil and natural gas out of Russia are unlikely given the West’s aversion to the higher prices that would likely follow. Meanwhile, Russia is unlikely to withhold volumes given its reliance on oil and gas revenue. Furthermore, effective sanctions that bite, might materially impact Western firms, making them less likely to be implemented, as well. That said, the uncertainty adds a new level of risk for those firms operating in the country. Of the integrated oils, we find BP and TotalEnergies to be the most exposed.