The Impact of the Russia-Ukraine War on Global Energy Prices: Multi-Country Panel Data Analysis

Abstract

This paper investigates the impact of the Russia–Ukraine war on global energy prices using a monthly panel data set for the period 2010–2024. A two-way fixed-effects model is estimated for the logarithm of a general consumer energy price index, complemented by sub-market indices for motor fuels, natural gas and electricity. The empirical specification includes a war dummy, the geopolitical risk index developed by Caldara and Iacoviello (2022), as well as macroeconomic and structural control variables capturing real GDP growth, consumer price inflation, exchange rates, energy intensity and net energy imports. Interaction terms for net energy-importing countries and for different income groups are employed to test for asymmetric effects. The baseline results indicate that the outbreak of the Russia–Ukraine war has generated a statistically significant and economically sizeable upward shift in the level of global energy prices. The strongest and most persistent effects are found for natural gas and electricity prices, while the impact on oil and motor fuel prices, although positive and significant, is more moderate. Energy-importing economies experience larger war-related price increases than energy exporters, consistent with an adverse terms-of-trade shock for importers. Geopolitical risk also exerts an upward effect on energy prices, but its marginal contribution becomes more limited once the war dummy is controlled for. Overall, the findings underscore the importance of energy security strategies, supply and infrastructure diversification and energy efficiency policies in reducing vulnerability to future geopolitical disruptions.