What’s at stake as fighting continues with Russia and Ukraine?

The ferocious financial backlash unleashed in the process is visible around the world, not just on Russian President Vladimir Putin’s situation, as the Russia-Ukraine conflict entered its seventh day on Wednesday, with the former continuing its attacks on crowded Ukrainian cities with a long convoy of Russian tanks and other vehicles.

According to various news reports, the protracted dispute might harm sectors that rely on the supply of raw materials, particularly industrial commodities, as Russia bears the weight of Western sanctions, which include cutting off several Russian banks from the interbank payments system SWIFT.

Furthermore, the consequences are endangering the global economy, causing financial markets to tremble, and making life more dangerous for everyone.

Areas of Impacts

Energy

Many European countries rely substantially on Russian energy, particularly gas, which is transported through numerous key pipelines. Even if the situation is resolved, it is possible that the heavy economic penalties imposed on Russia will make it difficult for these countries to buy gas.

Meanwhile, oil prices soared on Wednesday as supply interruptions grew as a result of Russian financial penalties, and traders hurried to find alternative crude sources in a market that was already tight.

Brent crude futures climbed more than $8 to a high of $113.02 a barrel, the most since June 2014, before dropping to $111.53, up $6.56 or 6.3 percent by 0950 GMT.

WTI crude futures in the United States also rose more than $8 a barrel, reaching their highest level since August 2013, before losing speed and trading up $6.39, or 6.2 percent, to $109.80 a barrel.

Transport

With global transportation already severely hampered following the pandemic, the conflict is likely to exacerbate the situation. Ocean shipping and rail freight are two types of transportation that are likely to be affected. While rail only transports a small percentage of total freight between Asia and Europe, it has been critical during recent transportation bottlenecks and is steadily increasing. Sanctions on Russia are expected to have a significant impact on countries like Lithuania’s rail traffic.

Supply Chain

Companies are trying to obtain enough raw materials and components to make items to fulfill growing client demand due to the world’s unexpectedly rapid rebound from the pandemic slump. Shortages, transportation delays, and increased pricing have resulted from overburdened factories, ports, and freight yards. Industries in Russia and Ukraine may be disrupted, delaying a restoration to normalcy.

Edible Oil

Ukraine accounts for nearly half of all sunflower oil exports. Importers will struggle to replace supplies if harvesting and processing are hampered in a war-torn Ukraine, or exports are halted.

With major supply interruptions looming in India, firms are left with few options but to contemplate raising prices of daily-consumed edible oils within weeks. Over 70% of India’s crude edible oil demand is covered by imports, according to the country’s main edible oil producers. The proportion of sunflower oil is even higher.

Food Supplies

Ukraine and Russia account for 30% of global wheat exports, 19% of corn exports, and 80% of sunflower oil exports, all of which are utilized in food processing. According to the Associated Press, much of the Russian and Ukrainian windfall goes to poor, insecure countries like Yemen and Libya.

The threat to eastern Ukraine’s farms, as well as a halt to exports through Black Sea ports, could limit food supplies at a time when prices are at their highest since 2011, and several countries are experiencing food shortages.