Saxo Group Videos

Jakobsen: How to calculate the cost of conflict

With economies taking uneasy steps towards recovery, the deepening of world conflicts comes at a fragile time. Saxo Bank's Chief Economist Steen Jakobsen reflects on the cost of conflict to the global economy, he argues that a so-called 'war tax' can be calculated by comparing the first WTI contract with the 5th, producing a risk premium of around 2.50 USD.

Steen states that: "The simplest way to “measure” geopolitical risk is to look at the price of energy. Energy is everything for a macro economist as it’s a tax on the economy when high, and a discount when low. High energy consumption levels makes it a critical part of any projection but despite this, energy assumptions are often exogenous (given!)."

03:51 minutes
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