RUSSIA UKRAINE WAR: ITS IMPACT ON US.

The Russia invasion of Ukraine began on 24th February 2022 and is an ongoing war and is
in its 16th day of mass destruction causing millions of damage to property and humanity.
Even though the war is happening miles away, it has an enormous impact worldwide. Russia
being the 3rd largest exporter and producer of Crude oil, gives out a total of 12% of it to the
world, moreover it exports 5 million barrels of Oil per day. Now the war has disrupted the
shipment of oil. There are several questions on how this huge country’s shipment of oil can
affect the world?
If Russia stops importing its oil in the international market then the demand and supply
equation would fluctuate i.e, take a hit, meaning it would increase the crude oil price around
$100 a barrel. For instance, the day Russia invaded Ukraine the crude oil price touched
$105 per barrel, and it was the highest jump in price since the last 8 years.
Now, why should common people like us be affected by this? The answer is Yes, it affects
us because our vehicles (car, bike, Scooter) run on these oil products. It’s a cycle to
explained -
● The refineries pay more for oil to the government/company. Next, These refineries
charge more to the Distributor.
● The Distributor then charges more money from the Retailers (Petrol Pumps).
● It’s us in the end, the consumers who have to pay more at petrol pumps for
diesel/petrol.
This would also make the transport more expensive. Thus, if the oil gets expensive;
transport also gets expensive. The effect of increasing oil prices is cascading. For instance,
A fruit seller would charge more to us because he pays more to the supplier; the supplier
charges more because he brings fruits from the warehouse to the seller. So it's the transport
that's affecting the price, even of basic essential items.
Another question is “How expensive would it be?” In India, the Reserve Bank of India
(RBI) states that every $10 rise in crude price adds about 0.5% to the inflation.
Moreover, the untimely war has led to MARKET UNCERTAINTY, because we don't know
how the war will go on. The more the war continues leading to more damage, the more the
price will increase.
Secondly, the western countries have posed SANCTIONS to Russia. The G7 countries have
decided to freeze the assets of Russia. Moreover these western countries have decided to
cut off the shareholding of Russian Oil Companies with them.
The European countries import 40% gas from Russia, thus it is difficult for them now to divert
to other countries for their oil needs. It is also because a lot of pipelines run through Ukraine
and the war has already disrupted the supplies.
Whereas talking about India, it imports 80% oil from Russia, thus India might suffer an
IMPORTED INFLATION.
Let’s talk about Ukraine now, Ukraine has a huge role in the Energy market. It is the 2nd
largest reserve in Europe. The scenario for Russia would get worse if the west sanctions
against Russia's energy market, that would mean cutting of 10% of oil supply.
The war has affected Ukraine in enormous ways, like the oil shipment has been shut,
exports are blocked, the exporting and importing ships are being avoided in Black Sea,
several ports have suspended their operations especially its port city (Mariupol) is under
attack.
Back in the days before war; Ukraine was and is the largest supplier of Sunflower oil and the
war has disrupted the global supply chain. Russia’s war with Ukraine hasd put a lot of stake
on, primarily food supplies like the Corn, Wheat, Barley and Rye. Lastly the war has also
affected energy supply like the Gold, Precious stone, Coal, Fertilisers and Precious metals.
Therefore the war is having a worldwide impact, affecting prices and quality of essential
items.