A deepening crisis in the Ukraine would certainly be negative for the global economy, although the impact on North America would be fairly limited — the primary effect being on food and energy prices — suggests BMO Capital Markets in a new report.

BMO notes that while “market angst over the tensions between Ukraine and Russia has eased”, the situation remains a concern for markets. There’s a fear, for example, that Russia could make a push into other Russian-speaking provinces in a bid to defend Russian interests, it says. And, the standoff over Crimea is not over, it adds.

“This crisis is not over yet. As such, it’s worthwhile to take account of the potential economic ramifications,” it says. “Clearly, an intensified conflict would be negative for the region and global economy.”

Indeed, the report says that the threat of economic sanctions on Russia, and talk of its possible explosion from the G8, reflects a “steep deterioration in relations with Russia”. This is “broadly a negative”, it says, noting that the consequences for the Russian economy “could be quite severe … depending on the extent of the sanctions.”

However, given that “Russia is a key supplier of oil and natural gas to Europe”, and that it has extensive direct interest in the country, BMO suggests that Europe could be reluctant to apply harsh sanctions.

“While winter is coming to an end and natural gas stockpiles in Western and Eastern Europe are ample, gas prices would still likely jump if Russia cut off supplies. Oil prices would no doubt follow suit. That would be a tough pill to swallow for a European economy struggling to emerge from recession,” it says.

“The impact on North America would be much less severe,” it says, noting that trade with Russia and Ukraine is limited. “The only major direct impact would come from higher oil prices,” it says, although this would be a negative for U.S. consumers “who are pegged to be the drivers of improving economic momentum.”

Other commodities could be impacted by a worsening crisis too, BMO says, particularly as Ukraine is a significant grain exporter. “Similar to energy prices, higher food prices would stifle the recovery in developed economies,” it says.