Why the Ongoing Russian-Ukrainian War Can Be the Wrecking Ball To The World

The war between Russia and Ukraine is heating up. The ongoing war in Eastern Ukraine, which has broken out once again and is escalating as we speak, will be the wrecking ball to the world just like the first World War was.

Oil prices jumped yesterday in response to a jump in the price of Brent crude to $105 per barrel. European natural gas supplies come predominantly from Russia, and Europe is heavily dependent on them; around 40% of its natural gas comes from Russia and around 25% comes from that source. A cutoff of Russian energy supplies could undercut Europe's economy. High natural gas prices have already led to higher home heating bills, crimping consumer spending.

Futures on Dutch gas jumped as much as 41% to 125 euros ($170) a megawatt-hour, with European coal for next year also surging, rising 13% to $145 a ton on the Intercontinental Exchange in London. Costly gas has forced production cutbacks at producers of fertilizer and some other heavy industrial users, helping to push annual inflation as high as 5.1%.

With the continuing fighting in Ukraine and Russia's annexation of Ukraine, the world is left on edge. After declared sanctions against Russia, its economy will suffer as well.

A simulation run by Goldman Sachs projects that a %10 decrease in the Russian economy results in a %13 increase in global petrol prices.

As a result, the global economy will suffer. In addition, there could be a ripple effect throughout Europe, which receives about 30% of its gas from Russia.

 

Russia and Ukraine account for nearly a quarter of total global wheat exports. That flow of grain makes up more than 70% of the Middle East and Africa's total wheat imports.

Russia is also the world's third-largest corn exporter, accounting for 15% of total global exports. China, Iran, and Saudi Arabia are among Russia's top 10 corn importers.

Beyond grains, Ukraine is also the leading poultry exporter to North Africa and the Middle East. The country is also Europe's top sunflower oil producer and the second biggest exporter in the world behind Argentina. Ukrainian soybean production has doubled over the past decade as well - making it a rising competitor against the United States, although still on a much smaller scale.

The current war between Russia and Ukraine will wreck global food markets. It will also cause economic turmoil around the world as global food prices rise because of a lack of supply.

The world is on the verge of a major food crisis, it's a global issue that can cause global unrest. It all started with the ongoing war between Russia and Ukraine, which is one of the biggest producers of grains in the world. 

The effect of the war cast a shadow over the area, it has sent the price of wheat to its highest level since 2012. Wheat on the Chicago Board of Trade was 5.7% higher at $9.3475 a bushel, as well as the prices of oilseeds, corn and soybeans are also soaring about 5%.

 

Ukraine is a major producer of uranium, titanium, iron ore, steel and ammonia. Steel alone makes up around 10% of Europe’s imports. Any disruption to the shipment is sure to tighten Europe's already strained market and keep prices at the record high they reached last year. Russia's recognition of the independence of Donetsk would threaten a number of ports that ship grains and minerals across Europe. Any disruption to the shipment is sure to tighten Europe's already strained market and keep prices at the record high they reached last year.

If you're wondering why China has been busy buying up gold and the West continues to hold it back from the global market, then look no further than this ongoing conflict.

Ukraine is now one of the world's biggest exporters of oil, gas and other raw materials, while Russia controls about 10% of global copper reserves and 4% aluminium, and is a major producer of nickel and platinum, according to CNBC.

The two countries also control about 40% of the world's wheat exports - which means that if this war does indeed take hold then there will be a serious shortage in supply.

This sudden shift in power has seen Russia making some bold moves in order to maintain its position as a key player on the world stage.

For instance, when Russia annexed Crimea in 2014, it went on to gain control of 1,500 factories which produced more than half of Ukraine's gross domestic product at the time.

This action was followed by a move to allow other major companies such as Gazprom (Russia's state-owned energy giant) and Russian Railways to enter the country with their own operations.

The ongoing Russian-Ukrainian war will inevitably lead to a global economic recession. Russia is the largest producer of palladium, which is essential for oil refining and in the production of catalytic converters, which control emissions in automobiles. The supply of palladium is limited, and most of it comes from Russia.

It's worth mentioning that Palladium is used for everything from automotive exhaust systems and mobile phones to dental fillings.

Also, it’s worth mentioning that a Heidelberg spokesperson said "We do not expect any major impact on our Russian business should the conflict escalate further. All of our three Russian cement plants supply their respective local/regional markets and do not export outside Russia," Heidelbergcement, a German company that has three active plants in Russia sold its Ukraine operations in 2019.

There's no doubt the ongoing war in Ukraine is a proxy war between Russia and the U.S. The only question is, when will this proxy war become a full-blown World War III?

As tensions escalate between two of the most powerful nuclear-armed nations in the world, investors are scrambling to find ways to protect their portfolios from what could be devastating losses.

 

Housing prices in the country are likely to increase in the coming months due to a likely rise in rates of raw materials like cement and steel, realtors' body CREDAI said yesterday.

The housing industry will be adversely impacted if there is a rise in rates of raw materials like cement and steel, according to the Confederation of Real Estate Developers' Association of India (CREDAI).

CREDAI President Harshvardhan Patodia: "Eventually, the impact will trickle down into the real estate industry as well". The president of CREDAI said that a rise in the price of construction materials by 20-30 per cent has forced developers to increase the price of their projects.

Patodia added, "Industry forecasts indicate that prices will rise much more in the coming quarter and given the current crisis, the surge may grow manifold".

As the United States continues to ramp up the pressure against the Putin regime and its supporters, European countries are starting to feel the pain of their actions. Though there are no sanctions against construction materials (as of yet), the disruption of rail traffic is certainly going to affect countries that rely on freight to move products from western Europe to eastern and central Europe.

Certainly, the disruption of freight traffic will have an impact on construction materials, as trains are now being rerouted away from Ukraine; however, countries such as Lithuania are expecting sanctions against Russia to have a significant impact on their rail traffic. Furthermore, nickel and copper, which are used in manufacturing and construction, have been rising in price.

In addition, nickel and copper, which are used in manufacturing and building respectively, have also been soaring. In fact, many believe that these commodities will be a major factor for economic growth in countries like China. The same can be said for other countries as well. For example, Brazil is one of the biggest producers of nickel and copper in the world. Therefore, it makes sense that Russia would want to control this part of Ukraine since it is rich in mineral resources.

The bottom line is that there are many geopolitical factors at work here and this war will have a huge impact on the world economy for years to come. This means that all these issues must be dealt with using diplomacy and not military force. Therefore, this war between Russia and Ukraine will not only lead to more deaths but also to economic ruin around the world.