How Will Russia’s Invasion of Ukraine Affect the Global Market

On the morning of the 24th of February, the world has turned upside down for millions of people in Ukraine. A full-scale Russian invasion of the neighboring country was something that no one expected to see in the 21st century, and now the entire world is observing the escalation of the situation in Ukraine and holding its breath in the face of the unknown future.

The terrifying events of the past 19 days will be forever inscribed in the world’s history. It will be on the pages of history textbooks, and it will definitely affect our future lives. For everyone concerned about the future of the global market, especially young generations of students, it is now crucial to keep an eye on the events that are unfolding in Ukraine. Once again, this will affect everyone.

If you are a student yourself, the chances are that you are already monitoring the events and discussing the situation in college. Maybe, some of you are already being assigned to write academic papers on this topic. If that’s the case, remember that you can get academic paper writing help by WritePaper and receive a guaranteed high grade for your assignments. In the meantime, you can use the time you saved to learn how Russia’s invasion of Ukraine affects the global market in order to be prepared for the future.

Energy Concerns

First and foremost, one of the biggest impacts of the war will be a global energy crisis. There is no secret that gas is and has always been one of Russia’s most significant strategic assets. The country supplies gas to Europe and other countries across the globe. So, it is easy to guess that cutting off from Russian gas can have a devastating effect on the global market.

Europe, which is very dependent on Russian gas, won’t be able to find alternative suppliers soon enough after and if pipelines are cut completely. Given the cold winters that are typical for that area, you could think that the lack of gas can cause a whole range of issues for local people. But, in fact, Europe has pretty good storage levels. So, the problem with gas isn’t too acute.

Nevertheless, what will really be acute is the problem of the price of gas, oil, and other commodities. This can hit consumers and contribute to inflation. Analysts predict that in the worst scenario, the cost of a barrel of oil can rise to $120-$140. The growing price for commodities would add around 2% to economic inflation. Apparently, the energy concerns will affect Europe more than the US. But, in any case, specific effects will be felt everywhere.

Food Market Crisis

If you are a student entrepreneur or planning to start a business in the future, you should already know that everything in the global market is closely interlinked. There is a wide range of price drivers that affect the cost of various products. The drivers can include exchange rates, interest rates, etc. But, oil prices are among the most significant price drivers of all. This basically means that if the price of oil rises, so will the cost of other goods. In particular, food.

When oil prices go up, the cost of production and transportation of food will grow naturally. Respectively, food prices will jump as well. This phenomenon isn’t rare and can be observed at different stages of our history. Respectively, it is fair to believe that since Russia’s invasion will give rise to the cost of oil, it will also cause a massive food market crisis.

Apart from the situation with oil, it is also worth noting that both Ukraine and Russia have always been known as some of the world’s leading grain exporters. Both countries have been supplying us with grain for decades. Respectively, if these countries face issues with exporting grain, this can cause a major disruption of the world’s food supply.

Effects of Sanctions

Everyone who is keeping an eye on the war in Ukraine already knows that European countries, together with the United States and many other representatives of the global community, are applying strict sanctions on Russia. The sanctions apply to Russian companies, banks, as well as international brands who used to be represented on the Russian market. Needless to say, this will also affect the global market.

According to experts, the long-term consequences of additional sanctions will mess up global financial and trade relationships. Some effects are already seen now. For example, one of the first sectors to suffer from Russia’s invasion was the maritime sector. Sovereign debt, investment, as well as other areas in the private equity and mutual funds industry will also suffer from sanctions.

Basically, the ripple effect of current events will shake the entire financial sector. Currently, the US financial markets have already gone down by 12% since the beginning of the year. And the situation is predicted to get even worse. What’s next? In the face of global tension and rising inflation, even those sectors of the market that are doing very well will likely suffer and lose profitability.

Further Destabilization

Eventually, the growing prices, strained financial and trade relationships, issues with supply chains, and other problems that will arise from Russia’s invasion of Ukraine will most certainly create a threat of ongoing, long-term destabilization of the global market. The war will have a vast array of effects. Some of them can be observed now, whereas others will only show in the future.

One way or another, the process is impossible to stop now. Economic destabilization is already here. There will be more issues with export and import, growing unemployment rates, increasing prices for basic goods, and much more.

In the long run, these issues will affect everyone, including businesses and regular consumers as well. According to experts, the most devastating effect will likely fall on the poorer countries that already have weak economies. In the worst-case scenario, the continuing destabilization will simply destroy what is left of the economy in developing countries.

The Bottom Line

In the 21st century, every educated and wise human will agree that war is no longer an appropriate way to solve international conflicts. In fact, it has never been. War is a terrible crime against humanity and democracy. And, no matter where it takes place, it influences everyone, even in the most distant parts of our world.

Unfortunately, despite all our hopes, Russia’s invasion of Ukraine is already taking place. The world is already in a war. And whether we want it or not, it is already affecting our lives in so many ways.

From the global perspective, one of the biggest effects of the war is a destabilized economy. As you know now, even a few weeks of a military conflict are already affecting all sectors of the global market, including energy cost, food prices, trade relationships, and the overall economic situation in the world. The effects of these events will be felt for a long time. But, the sooner we stop this, the more chances there are that the world will get through this crisis faster and easier.