Shashwat Mishra – Mumbai Uncensored, 24th February 2022
Amidst the ongoing tension between Russia-Ukraine, there is a sense of uncertainty and unpredictability among countries other than those who are actively involved in the said dispute. The ongoing situation begs a question that, what could be the potential impact on India if at all Russia-Ukraine conflict leads to more hostility and enmity between the two countries? The following ramifications may arise due to the above conflict:
Price Rise of Natural Gas
Due to the ongoing conflict between Russia-Ukraine the price of Brent crude oil has reached to 96.7$ per barrel, this is the highest since September, 2014. Russia, as we know is one of the biggest producers in the world when it comes to crude oil, the current crisis may further shoot up the price to 100$ per barrel. The following factor will have a spillover effect on the global GDP levels as well. A recent report by JP Morgan reveals that rise in global oil prices to 150$ per barrel would reduce the global GDP growth to just 0.9 per cent.
Rise in Petrol-Diesel Prices
It has been seen in the past that a rise in crude oil prices have had a direct impact on petrol-diesel prices wherein there is a rise in Petrol-Diesel prices. India saw a record rise in the petrol-diesel prices in the year 2021. The Russia-Ukraine conflict could lead to a rise in fuel prices in India, it is pertinent to note here that about 25% of India’s imports comprises importing Oil and 80% of India’s oil requirement is dependent upon imports. A rise in fuel prices will also affect the current account deficit.
A Potential Rise in Wheat Prices
If the ongoing conflict between Russia-Ukraine intensifies, foreign policy experts fear that it could have an interruption in the flow of food grains from the Black Sea region, and the same may further lead to inflated food prices. The said impact is also being speculated as the two countries, i.e. Russia and Ukraine are one of the top exporters of wheat in the world.
Investor Sentiments & Market Behavior
The animosity between the two countries could lead to a sluggish investor sentiment, as such incidents lead to an environment of uncertainty, and uncertainty in any market can never lead to growth, as different economies around the world benefit from healthy investor sentiment and an environment of certainty.
