The negative impacts of an impending invasion are already visible through volatile equity markets and rising crude oil prices
Ukrainian soldiers at a front line position, which has come under recent mortar attack, in Novozvanivka, Ukraine. Tyler Hicks/The New York Times
As tensions continue to simmer between Russia and Ukraine, the rest of the world is calling for de-escalation of the crisis. However, with Russian President Vladimir Putin sending in troops to rebel-held regions in eastern Ukraine and the United States and allies imposing sanctions on Russia, the situation continues to remain grim.
The outbreak of war over Ukraine can have detrimental effects the world over. The negative impacts of an impending invasion are already visible through volatile equity markets and rising crude oil prices. While India has yet to make a strong stand in favour of either party, the country will see several things becoming more expensive, such as crude prices and other commodities, war does break out.
Here is a list of what may get more expensive in India, if Russia and Ukraine go to war:
Prices of crude petroleum and natural gas:
In 2020, Russia was the third-largest producer of oil, with an estimated production level of 10.50 million barrels per day, according to statistics by the US Energy Information Administration. If Russia and Ukraine do go to war, crude oil and natural gas prices are set for a steep rise. The price of crude oil is hovering around $100 a barrel presently.
India, which imports about 80 percent of its energy needs through oil imports could be one of the worst affected nations in this crisis. Rising energy import prices will also lead widen the country’s current account deficit.
Crude-oil related products have a share of over nine percent in the Wholesale Price Index (WPI) basket, according to a report in India Today. The rising oil prices may raise the country’s WPI inflation by around 0.9 percent.
Price of edible oil, kerosene and LPG:
Ukraine is responsible about 70 percent of India’s sunflower oil imports according to a report in The Deccan Herald. Apart from that, the rising sunflower oil prices could also push the prices up of other edible oils as well.
The rising crude oil prices may lead to an increase in the price of LPG cylinders and kerosene as well.
Price of electricity:
The rise in energy prices will also lead to a surge in prices of electricity production, which in turn will lead to higher electricity bills for consumers.
Price of wheat:
Another essential commodity that is set to be impacted adversely by the war is wheat. Both Russia and Ukraine are two of the world’s largest wheat producers and account for about a quarter of the crop’s global production.
Any disruption in the global supply of the crop due to war can lead to a steep surge in food prices.
Price of metal products:
Russia is the largest exporter of palladium, a metal used in a range of products from mobile phones to automotive exhaust systems. Any disruption in the supply of the metal due to sanctions could lead to a huge disruption in the supply chain of these products, pushing their prices up.
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