A Russian invasion of Ukraine could rock stock markets and send energy prices soaring. Here's what Wall Street strategists are saying

• Western governments have warned that Russia could be about to invade Ukraine.
• Russia said it was pulling some troops back Tuesday, but tensions are still running high.

Western governments have warned over the last week that a Russian invasion of Ukraine could be imminent, shaking stock and energy markets.

Russia on Tuesday said certain military units were heading back to their bases from the Ukrainian border, raising hopes that tensions may be cooling. But NATO said it had yet to see any signs of a reduced Russian military presence there.

The Russia-Ukraine crisis has already rattled financial markets. A full-blown war could send energy prices soaring and even tip several economies into recession, according to analysts. Here's what top Wall Street strategists are saying.

Oil and gas prices likely to jump

"War is always a loser's game," David Kelly, chief global strategist at JPMorgan Asset Management, said in a note to clients Monday. "Whatever the goals of an invasion, its immediate effect would be in lives lost and ruined on both sides."

He added: "For financial markets, a Russian invasion of Ukraine could first be expected to boost global energy prices. Russia supplies roughly a third of all the natural gas consumed in Europe, and accounts for over 10% of global oil production."

Energy spike could trigger recessions

Mike Wilson, equity strategist at Morgan Stanley, said in a Monday note to clients that an invasion may well lead to a "spike" in global oil and natural gas prices.

"Such a spike would destroy demand, in our view, and perhaps tip several economies into an outright recession — the polar vortex."

Global stocks could fall more than 10%

"In the event of an armed conflict, we would see a strong increase in financial market volatility from current levels," Michael Strobaek, global chief investment officer at Credit Suisse, said in a note Monday. "Global equity markets could fall more sharply, i.e. more than 10%."

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Strobaek added: "However, there is no way for investors to verify or quantify the magnitude of open conflict. Like most investors, we do not have any credible intelligence regarding the decision-making process of Russian or NATO military planning. It is therefore important to keep a strong focus on risk management."

Oil may rise less than expected

"Even if the situation escalates, we think the fundamental risk is modest for oil (unlike gas)," analysts at Morningstar said in a note last week. "While Russia accounts for 10% of global supply, most of these volumes are produced far from Ukraine, and only a sliver is shipped through it."

"Western leaders want big sanctions, but will probably stay away from oil exports to avoid shooting themselves in the foot, and a 1970s-style embargo for Russia would hurt too much to justify."

War could still be avoided

"In our central scenario, we still think diplomatic efforts will eventually lead to a dialing down of tensions," Mark Haefele, chief investment officer at UBS Global Wealth Management, said in a note to clients Monday.

"This may take several months, during which the possibility of flare-ups like the one we are experiencing today remains elevated."

"But we believe that both sides will ultimately calculate that military conflict comes at a too high an economic and political cost to be worthwhile."