The Impact of Political Decisions on Oil and Gas Companies

The energy sector has seen many changes in the past years after the coronavirus pandemic and high volatility as Russia invaded Ukraine, with oil and gas stocks having highs and lows. Using the event study approach, we analyze the effect of the announcement of the partial mobilization of the Russian army on 21 September 2022 for listed energy companies in Russia. We find that the announcement had a negative effect on Russian oil and gas companies. Moreover, this negative effect was larger one day before the announcement, which can be correlated with a possible insider trading event. Our results show the riskier profile of the energy sector in relation to possible events like political decisions or declarations. Our findings have important implications for policymakers, who have to take into account the fact that words have meaning in the financial market.