THE IMPACT OF NEWS ABOUT EUROPEAN SANCTIONS ON THE MARKET CAPITALIZATION OF THE RUSSIAN OIL AND GAS SECTOR

Abstract

The study tests the hypothesis that information about planned EU sanctions against Russia exerts an independent effect on the market capitalization of the Russian oil and gas sector even before the restrictions are formally imposed. To examine this effect, a two-stage model of sanctions impact is employed, allowing the market response during the sanctions discussion stage to be compared with its response following the official imposition of the restrictions. Using an event-study approach, the dynamics of the ruble-denominated MOEXOG index and the US dollar-denominated RTSOG index of the Moscow Exchange are analyzed across 19 EU sanctions packages over the period from December 2021 to October 2025. The results show that, on average, the most pronounced negative revaluation of oil and gas assets occurs when information about forthcoming restrictions first emerges. The average change in the MOEXOG index was −5.51% before the imposition of sanctions and +0.83% after their introduction; for the RTSOG index, the corresponding changes were −4.96% and −2.14%. The monetary valuation shows that, prior to the imposition of sanctions, the average negative revaluation of a hypothetical index portfolio reaches RUB 155.4 billion, whereas after their introduction the portfolio recovers by RUB 23.4 billion. The findings confirm the existence of an information channel through which sanctions affect the sectoral level. Sanctions-related news shapes market expectations and triggers a reassessment of risks before the restrictions legally enter into force. Thus, in many cases, the formal imposition of sanctions becomes a stage at which previously formed expectations are adjusted.