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The economic impact of the war that involves the world’s largest exporter of natural gas and the second largest exporter of oil was intensified on Tuesday, the 13th day of the conflict.
In what he called a “powerful blow” against Russia for the invasion of Ukraine, US President Joe Biden announced that he was vetoing Russian oil and gas imports.
why it matters: The decision raises the price of barrels, scares global markets and raises fears of a new economic turmoil after the peak of the coronavirus pandemic in the world.
- Russia has the world’s eighth largest oil reserves (4.8%);
- Moscow supplies about 40% of Europe’s natural gas; the input is the second most used energy matrix on the continent.
Although Biden said the decision is backed by allies, the move worries European countries heavily dependent on Russian gas.
Vladimir Putin’s government has been threatening to cut emissions to the bloc, and even if the European Union makes plans to try to reduce its countries’ dependence on Russian fuel, that reality is still distant.
“Right now, Europe’s energy supply for heating, mobility, power supply and industry cannot be guaranteed otherwise,” German Chancellor Olaf Scholz said in a statement on Monday.
Russia has announced that it will cut or limit the purchase and sale of basic goods from several countries (the list of those affected is yet to be released). It is another part of the “catastrophic consequences” warned by the Kremlin in the face of the West’s response to the onslaught of Russian troops.
Do not get lost
Conflict has economic effects that go beyond fuel. Columnist Mauro Zafalon, from Vaivém das Commodities, explains the impacts of the conflict on four relevant products for Brazil.
Fertilizers: Russia is the main exporter to Brazil — 28% of what the country imported of these inputs in 2021 came from Putin’s country and ally Belarus, also targeted by measures. Agricultural producers and manufacturing companies are looking for alternatives to maintain supplies to the country, but a scenario of falling supply of fertilizers can cause the price of items already hit by the crisis, such as grains, to rise.
Wheat: Russia and Ukraine are responsible for 29% of world wheat exports, and Brazil is one of the biggest importers of this cereal. The conflict between the largest exporters affects international prices, which are already going through successive increases. The consequence is felt in the consumer’s pocket. Flour and bread rose 1.4% and 1.2%, respectively, in mid-February, when there was already a threat of invasion.
Soy oil: the conflict also causes turmoil in the vegetable oil chain. Ukraine is an important exporter of sunflower oil, and the obstacles in its supply have increased demand for one of its competitors, soybean oil, of which Brazil is a producer. The increase in external demand can impact the price of the product for the consumer.
Corn: Ukraine is the fourth largest grain exporter in the world, behind Brazil, second. In this case, the impact on the consumer’s pocket goes beyond the purchase of corn and its derivatives It also increases the cost of other food items, such as chicken, since corn is used in animal husbandry.
What happened this Tuesday (8):
What to see and hear to stay informed
We have selected a report and a compilation of images that show the consequences of the conflict for the civilian population.
