Contracts in crisis: The war in Ukraine and long-term contracts in energy markets

We examine the impact of the war in Ukraine on long-term contracts in energy markets. We find that traded contract volumes fall by 65 percent in the first months of the war. A collapse in bilateral trading contributes most to this decline. To protect themselves from price shocks, firms increasingly turned to long-term contracts already before the war. In sum, our results show that the market continued to serve firms' hedging needs during the crisis, but bilateral trading networks collapsed, and liquidity was largely provided by centralized markets.