Within hours of Russia’s invasion of Ukraine, we were presented with a human catastrophe: the loss of life and the destruction or seizure of infrastructure. The ensuing economic disaster will have a terrible human cost. The economic consequences, on the other hand, will be felt around the world, not only in Ukraine and Russia.
First, the Russian economy is important because it is a key global supplier of commodities including oil and gas, as well as nickel, palladium, coal, copper, and wheat.
Russia’s attack on Ukraine may be felt worldwide
Furthermore, Russian leader Vladimir Putin has significant ties to Saudi Arabia and other oil-producing nations, so this will not be as straightforward as it appears. According to The Sydney Morning Herald, Russia has reinforced its ties with Iran and other non-democratic governments in the emerging world as a bulwark against the West.
Although the US does not rely on Russia for substantial imports, central bankers cautioned at a recent conference that geopolitical worries “may induce spikes in global energy costs or exacerbate global supply limitations.”
Russia’s invasion may create a further delay in the United States’ return to normalcy after more than two years of shutdowns and COVID-19-related limitations. According to The Wall Street Journal, the economic ramifications were felt on Wall Street, with futures falling by a broad daily margin of 2.5 percent.
Even if the US purchases very little Russian oil, changes in oil prices in one region of the world have an impact on prices in other areas of the world. President Joe Biden said on Thursday that his administration is using “every tool at its disposal” to protect American families and businesses from rising gas prices.
Russia produces 10 million barrels of oil per day, or roughly 10% of global demand, and is Europe’s leading supplier of natural gas, which is used to power factories and heat homes and businesses. Although oil prices have risen to around $6 per barrel, the stock market has plummeted.
NATO Secretary-General Jens Stoltenberg declared that if Russia invades a NATO member country, including Ukraine, the armed alliance will defend every inch of its territory. During World War I, two Ukrainian republics were established, one on either side of the former Russian-Austrian border. They merged in 1919 to become the Ukrainian People’s Republic, which is currently a sovereign state.