How do Russian sanctions affect the world?

Avatar of Nick John By Nick John Dec21,2023 #Russian #sanctions
How do Russian sanctions affect the world? 1
How do Russian sanctions affect the world? 1

French Finance Minister Bruno Le Maire said the European Union (EU) and the US have launched an `economic war` against Russia, referring to Western sanctions that have cut the country off.

A woman walks past an electric board displaying the exchange rate between the dollar and euro and the Russian ruble on February 22 in Moscow.

Sanctions are causing Russia to face a financial crisis as the value of the ruble plummeted to a record low compared to the USD, causing Russians to immediately rush to ATMs to withdraw cash because

However, Russia is not the only party suffering from sanctions, which were launched in response to the military campaign that President Vladimir Putin’s administration launched in Ukraine.

Energy prices increase

Oil and natural gas prices jumped after another round of Western sanctions on Russia over the weekend as traders rushed to stock up to prepare for future supply disruptions.

To date, the sanctions have not directly targeted the energy sector, but experts fear that Moscow may retaliate by restricting oil and gas exports to Europe.

`Energy supplies from Russia are subject to a lot of risks, they are at risk of being retained as weapons by Russia or eliminated from the market due to sanctions,` said Louise Dickson, oil market analyst at the company.

There are also concerns that the exclusion of some major Russian banks from the SWIFT international payments system could make it more difficult to buy oil and gas from Russia.

The above scenario is making many people in Europe, which imports more than a third of its gas and a quarter of its oil from Russia, feel uneasy.

`So far the sanctions seem to be avoiding the energy sector so the spillover impact is not yet serious,` said Jim Reid, an analyst from Deutsche Bank.

Food prices increase

The crisis also raises concerns about the risk of shortages in the supply of cereals such as wheat, corn or oilseeds.

Russia and Ukraine together account for about 30% of global wheat exports, nearly a fifth of commercial corn and about 80% of sunflower oil exports.

Experts predict that Russia’s military operations will increase food prices in countries such as Libya, Yemen or Lebanon, deepening the food crisis in these countries.

The conflict has disrupted exports from Black Sea ports, which are used to ship grain to Asia, Africa and the EU.

Inflation continues

For most people around the world, the economic impact of the Ukraine crisis and sanctions on Russia will be felt as rising inflation stems from rising metal, energy and food prices.

Aluminum prices have risen to record highs, surpassing their 2008 peak during the global financial crisis.

The supply of energy-intensive metals will also be affected by higher energy prices and power shortages could cause many factories to close.

`Global supply chain disruptions are the main risk and, at the very least, prices for these commodities are likely to remain high for some time yet, driving up global inflation,` said Jason Tuvey of the firm.

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