Today's NewsWhat Financial Impact Does the War Have on the World?

What Financial Impact Does the War Have on the World?

As the war between Russia and Ukraine head into its second week, we may have started to worry about the financial impact of the war since seeing the chilling images and videos being streamed and talked about on nearly every news platform and social media outlet, it is sometimes easier to have the notion that because it is happening on the other side of the globe that we are safe. We lull ourselves into believing that we will not directly be affected by the impact of the war. This is somewhat naive. The reality is that in two short weeks, this war has already had a massive impact on the global economy. 

What Is At Stake – Financial Impact?

The Western nations have imposed sanctions cutting off many Russian banks from the SWIFT system, which is used for interbank and international payments and transfers. Although Russia will bear the brunt of these sanctions, the continuation of conflict can affect industries that depend on raw materials, especially industrial commodities. Moreover, the repercussions are shaking the financial markets and affecting the global economy, which is perilous.

Which Sectors will be Most Impacted by the War? – The Financial Impact

Energy

What Financial Impact Does the War Have on the World? | Healthier Me Today

 

  • As Russia is responsible for 17% of the world’s gas production, many European countries are still very dependent on Russia for gas.
  • With the harsh economic sanctions placed on Russia, even when the conflict comes to an end, these countries will struggle to import gas. 
  • Russia was exporting around 6.5 million barrels of oil per day.
  • There is an already limited market for oil, and as oil prices continue to surge, there is a scramble to find alternative sources. 
  • Brent crude oil is at its highest since June 2014, rising by more than $8, bringing the cost per barrel to an astronomical $113.02 a barrel. 

Edible Oils

What Financial Impact Does the War Have on the World? | Healthier Me Today

 

  • Russia and Ukraine account for 75% of the world’s sunflower oil exports. 
  • Ukraine alone makes up for almost half the exports of sunflower oil. The harvesting and processing have come to a halt during the conflict. 
  • Exports have been blocked, and importers are struggling to find alternative suppliers. 
  • India imports 70% of its edible oils and has had no option but to hike up prices on these oils within weeks. The price hike for sunflower oil will be even higher.  

Supply Chain and Transport

What Financial Impact Does the War Have on the World? | Healthier Me Today

  • The aftermath of the recent pandemic has already severely disrupted global transport. The war will undoubtedly create further delays and problems. 
  • Ocean shipping and rail freight are the two modes of transport most affected. 
  • Rail plays a vital role in transport disruption and is firmly growing.
  • Lithuania’s rail traffic has been severely affected by the sanctions against Russia.
  •  The recession created by the pandemic has left companies reeling to find enough raw materials to produce goods as there is a surge in demand. 
  • As for ports, freight yards and factories are already overwhelmed. It is causing shortages, shipping delays, and price increases globally. 
  • With the disruptions in Russian and Ukrainian industries, there is little hope of returning to normal conditions anytime soon. 

Food SuppliesWhat Financial Impact Does the War Have on the World? | Healthier Me Today

 

  • Russia and Ukraine are responsible for 30 percent of the world’s wheat exports, nearly 80 percent of sunflower oil, and 19 percent of corn. 
  • Poor and unstable countries like Yemen and Libya benefit from much of Ukraine and Russia’s bounty. 
  • Many countries are suffering from food and supply shortages, and the cutoff of exports will reduce the food supplies even further. 
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