& The world has changed thereafter.
Following the decision by Russian President Vladimir Putin to invade Ukraine, the above
phrase is what the state of affairs are!
When the world and humanity hoped that the pandemic has brought everybody together
blurring all the boundaries, the Russia-Ukraine scenario has diminished all of those hopes.
The repercussions coming out of it are dangerous. Stock markets have crashed the world
over, a few economies which were already struggling due to the recent impact of the
pandemic have shrunk further & then there's the big three-letter word- OIL
Brent crude prices breached the $100 per barrel on Thursday, for the first time since
September 2014.
The spike has been driven primarily by fears of supply-side disruptions, following Russia’s
invasion in Ukraine and Putin’s deployment of troops to separatist areas Donetsk and
Luhansk in Ukraine.
The Russian invasion of Ukraine could not only disrupt crude supplies globally but also lead
to sanctions by the US and Europe.
The oil prices have been rising over the last couple of months on concerns over supply,
following tensions between Russia, the world’s second-largest oil producer, and Ukraine.
There is also concern over the growing imbalance between demand and supply following the
opening up and normalization of the global economy after the Omicron wave has subsided.
How will it impact the economies of other countries?
There is going to be an inflationary impact. With countries like India who imports more than
80% of its oil requirement, rising oil prices will impact the current account deficit — the
difference between the values of goods and services imported and exported.
The rise in crude oil prices is also expected to increase the subsidy on LPG and kerosene,
pushing up the subsidy bill.
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Foreign portfolio investors would move out, the demand & supply mismatch would kick in
which would mean the hike in prices of goods and various essentials ultimately impacting the
common man all across the globe.
Once again the world will be undergoing a stringent test after COVID, the faster the war
subsides the lesser would the test be!
