Since the outbreak of the Russo-Ukrainian War on February 24, oil prices have soared to $110/bbl and triggered a sharp shock in the international commodity market, making it possible for it to continue to rise on top of the original high prices. Since the two sides of this war are relatively important in the world economy, this war is bound to have many adverse effects on the global economy.
First, it has triggered a tight energy supply in the world and increased prices
Both Russia and Ukraine are major suppliers of global commodities trade. Russia occupies a pivotal position in the world market, while Ukraine is an important global exporter of cereals and non-ferrous metals, the largest wheat producing region in Europe, and is known as the "granary of Europe".
Russia is the largest energy supplier to the EU, with about 40% of the EU's natural gas imports and nearly 1/3 of crude oil imports coming from Russia, with Russia's oil supply accounting for 29% of Europe's total oil imports in 2021. Moreover, Russia is one of the world's major oil producers, accounting for 11% and 35% of global oil production and exports respectively.
Russia's oil exports totaled $72.6 billion, second in the world after Saudi Arabia, and U.S. oil exports ranked fourth with $50.3 billion.
Russia is an important agreement on the OPEC+ production plan, and Russia's agreement production in January-February 2022 accounts for about 25% of the total OPEC+ agreement production.
Due to the outbreak of the Russian-Ukrainian war, the current crude oil price has exceeded 110 US dollars / barrel, natural gas has soared by 45%, and the price of more than 50 chemicals has been raised.
Second, the impact on the global food supply has led to an increase in food prices
Russia is the world's largest exporter of wheat, accounting for 10% of global production and 20% of international exports. Ukraine, on the other hand, is the world's fifth-largest exporter of wheat, accounting for 10 percent. The combined exports of the two countries account for 30% of the global wheat supply. Russia is also the world's largest exporter of nitrogen fertilizers, the second largest exporter of potash fertilizers, and the third largest exporter of phosphate fertilizers, all of which are related to agricultural production.
In addition, Ukraine's share of maize exports accounts for more than 10% of global exports, while also controlling the production and export of large quantities of sunflower oil and barley.
Due to water scarcity and dependence on imports, the Middle East is the world's largest wheat importer. Egypt has long been the world's largest wheat importer, needing to import 50% of its wheat each year, while 80% of its imported wheat comes from Russia and Ukraine, respectively, Egypt's first and second largest source of wheat imports, and Egypt is expected to import more than 13 million tons of wheat this year.
In the Middle East, in addition to Egypt, Lebanon and Libya are also highly dependent on wheat exports from Russia and Ukraine. Even the World Food Programme is buying wheat from Ukraine and providing food aid to Yemen and Syria. The rise in food prices triggered by the Russo-Ukrainian war could lead to further turmoil in the perennially chaotic Middle East.
For a long time, the international community has a saying that once Russia and the West clash, the consequence is "Europe is out of gas, the Middle East is out of grain", through this sentence, it is enough to see Russia's important position in international geopolitics.
Third, the global supply of non-ferrous metals will be affected
Russia has the world's largest high-grade nickel, and the producer Russian nickel Nornickel has maintained a stable production in recent years, basically maintaining around 210,000 tons. Russian nickel production is mainly concentrated in The country, and some nickel production is located in Finland and South Africa, of which the production in Russia accounts for 80%.
In 2021, the mainland imported 46,093 tons of refined nickel from Russia, accounting for 17.53% of the total imports, and this proportion was 39.31% and 45.48% in 2020 and 2019, respectively.
Russia's refined copper production in recent years is 1 million tons, accounting for about 4% of the global copper supply, the domestic demand is more than 300,000 tons, and the net export volume is 600,000-700,000 tons. At present, the global copper supply tends to be in a tight state, in a very low inventory situation, once the fluctuations caused by unexpected events, the price will definitely rise sharply,
Russia is second only to China as a producer of primary aluminum, with 3.764 million tonnes of rustal produced in 2021, accounting for 5% of global production, of which 93% is located in Siberia. The sales market is mainly Europe accounting for 41%, Russia and CIS countries accounting for 27%, and the mainland's electrolytic aluminum imports in 2021 are 1.58 million tons, of which imports from Russia account for 18.4%.
Ukraine is the world's important exporter of iron ore pellets, with exports of 36.71 million tons in January-November 2021, second only to Brazil and Sweden, and exports increased by 78.7% year-on-year due to rising iron ore prices.
Fourth, the impact on the global economic recovery is small
At present, most economists predict that any price increase triggered by the Russo-Ukrainian war will be short-term, it will not promote long-term inflation, and therefore has little impact on the ongoing global economic recovery.
For European countries, tight energy supplies and rising prices are still within the limits of what can be tolerated, as many European companies have reduced their trade with Russia since the Crimea incident in 2014. The United States itself is the world's major energy producer and exporter, so it is less affected by the Russo-Ukrainian War, and it is worth paying attention to domestic inflation, and the Fed needs to take measures to curb it.
However, for the Russian economy, the last round of Western sanctions imposed on Russia due to the Crimea incident caused its economy to fall into recession, and since then, after several years of efforts, the Russian economy has now been largely recovered.
However, in the long run, the Russo-Ukrainian war is very unfavorable to the future development of the Russian economy, and the sanctions and various repressive measures of the United States and Western countries may curb the growth potential of the Russian economy, and according to the analysis of economists, Russia's economic growth may fall below 1%.
The author believes that in the history of history, in the economic turmoil caused by war or other emergencies, international commodities will go through a process of great ups and downs, and the Russo-Ukrainian War is no exception. Although the war will affect the prices of commodities such as energy and food for a certain period of time, the price will gradually fall back to normal levels as the war tends to ease.
It turns out that the longer the events of international geopolitical conflict continue, the longer gold and the DOLLAR continue to rise, the more prominent their characteristics as safe haven assets, and the greater the ultimate negative impact on energy and commodities such as food and non-ferrous metals.
It is precisely for this reason that the overwhelming majority of countries and peoples in the world are looking forward to an early end to this war!
It is worth mentioning that since China is Russia's largest trading partner, the economic and trade cooperation between the two countries is getting closer and closer, and under the pressure of Western containment, Russia will further strengthen economic cooperation with China in the future, which will help promote the economic development of the two countries.
In addition, China and Russia have been cooperating to establish a new international payment system, so as to achieve the purpose of breaking the dollar monopoly and ensuring their financial security, and there is no doubt that the Russo-Ukrainian war will accelerate this process.