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Russia-Ukraine War: Possible Global Implications On Commodity and Oil Markets

Russia-Ukraine War Possible Global Implications On Commodity and Oil Markets 2
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The Russia-Ukraine war is a multifaceted and complex geopolitical struggle. Russia’s full-scale invasion of Ukraine in February 2022 was aimed at collapsing Volodymyr Zelenskky’s western-aligned government. It is an escalation of the Conflict that began in 2014 with Russia’s annexation of Crimea and support of separatist movements in eastern Ukraine.

Why is Russia at war with Ukraine?

The founding pillars of the ongoing Putin Russia Ukraine war are:

  • Soviet Union Legacy: After Russia, Ukraine was the second-most-populated and most vigorous Soviet republic regarding military strength and agricultural production, including the Black Sea Fleet and some nuclear weapons. The Soviet Union dissolved in 1991, and Ukraine became an independent country.
  • Historical and cultural ties: Also, to understand ‘why Russia is at war with Ukraine’, one must know that Kyiv, Ukraine’s current capital, is often referred to as ‘the mother of Russian cities’. In the eighth and ninth centuries, The Slavic people brought Christianity to Kyiv from Byzantium. Later, it laid the basis for modern Russian, Ukrainian, and Belarussian.
  • Western alliance: Since independence, Ukraine has gradually moved closer to Western institutions like the European Union (EU) and the North Atlantic Treaty Organisation (NATO). However, it only caused a divide between the Ukrainian-speaking population in the western parts and the Russian-speaking population in the east.
  • Euromaidan: In late 2013, Ukraine’s former president, Viktor Yanukovych, sabotaged plans to form an economic reform agreement with the European Union (EU). Many Ukrainians supporting the Western alliance felt betrayed and started countrywide protests known as Euromaidan.

Finally, in February 2014, pro-Russian separatists began the insurgency of the Ukrainian independent Republic of Crimea. It expanded in April 2014 when Russians and local proxy forces seized territory in Ukraine’s Donbas region. As a result, both America and the European Union came forward to support Ukraine.

How does the Russia-Ukraine war impact commodity and oil prices globally?

The Russia-Ukraine War severely disrupted the global food, fertiliser, and crude oil markets. International food, fuel, and fertiliser prices skyrocketed in the first half of 2022. They are primarily affected by the war in Ukraine and the sanctions imposed on Russia. Further, fertiliser export bans also contributed to global market disruptions.

Food and Fertilisers

Figure 1:  Actual Prices: Food and Fertilisers (Index based on constant USD prices. Base 100 = Average 2000-2020.)

On March 7, 2022, the WTI crude oil futures price reached US 133.460 dollars per barrel, and the Brent crude oil futures price reached US 139.130 dollars per barrel, the highest price since July 2008.

Export Share

Figure 2: Export Share

Putin Russia Ukraine: War Escalation in 2022

The important catalysts leading to a full-scale invasion of Ukraine are:

  • NATO Expansion: Putin has accused the United States and NATO several times of its expansion in the east. It violated pacts made in the early 1990s that NATO wouldn’t expand the alliance into the former Soviet region. Further, NATO installed missile defence systems in countries like Poland and the Czech Republic in Eastern Europe. On the other hand, despite not being a member of NATO, Ukraine grew its ties leading up to the 2022 invasion.
  • Western-style Democracy: The fear of Ukraine developing into a modern, Western-style democracy that will ruin Putin’s hold in Russia and Eastern Europe.
  • Superpower image: Losing a permanent hold on Ukraine and letting it fall into the Western regime would sabotage Russia’s international prestige.

Russia's full-scale invasion of Ukraine

Figure 3: Russia’s full-scale invasion of Ukraine

Latest Russia-Ukraine War update

Today’s ongoing Russia-Ukraine War news today highlights that Russia has intensified its striking on Avdiivka. At the same time, President Zelenskky has praised his troops for holding their position in the combat areas, including Avdiivka.


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