Amid surging oil prices and tensions in the economic markets with the Russia-Ukraine crisis, food supplies are disrupting across the globe, while supply chain worries are intensifying.
This could result in unprecedented inflation in forthcoming times as violence is likely to escalate if Russia captures Ukraine’s capital.
Food shortages just around the corner
The global supply chain, which was already strained due to the reopening of the economy after the coronavirus pandemic, is now facing another man-made challenge from the Russian war against Ukraine.
The persisting crisis is being felt badly by the airline industry as the closure of Ukrainian airspace has increased the burden in the skies of neighboring countries. Consequently, some flights have been canceled, while others have been rerouted.
On Monday, the world’s largest cargo aircraft named Antonov AN-225, which belonged to Ukraine, was destroyed by Russian forces.
According to the New York Times, aluminum, platinum, steel, and sunflower oil are the products most impacted by the Ukraine war.
Also, there are multiple industries across Ukraine, Russia, and Europe that are facing shutdowns, due to the raging violence.
Some things to ponder here:
1) Global high inflation is here to stay due to oil/gas and supply chain disruptions.
2) financial crisis risk increases as payment systems shutdown & Russia retaliates.
3) Russia has all the ingredients for hyperinflation.
— Cullen Roche (@cullenroche) February 26, 2022
Not only this, but countries worldwide are cutting off their trade with Russia, which is also impacting the supply chain dynamics of the world.
Meanwhile, investors are having the lowest faith in markets in recent memory, as the economic uncertainty looms globally.
A trade-based lawyer with law firm Greenberg Traurig, Laura Rabinowitz, indicated the duration of the invasion would ultimately decide when the situation would come back to normalcy.
She noted port congestion in the United States is still a pervasive issue, and the closure of industries in Asia adds fuel to the fire.
The supply chain crisis is ready to strangle the world
Automotive manufacturing giant Volkswagen is already facing severe repercussions of the war, as it suspended manufacturing electric cars at its main factory.
The company also announced it would stop its production in Wolfsburg, Germany, due to the shortage of different items used in car manufacturing.
As both Russia and Ukraine are the substantial source of platinum and palladium, this car’s manufacturing was bound to be hit, amid the rising violence.
On the other hand, Sunflower oil’s shortage, which is produced in both Russia and Ukraine, is likely to hit potato chips and cosmetic sectors worldwide.
The situation will take a violent turn if the conflict is extended until the summer, as it will eventually affect the summer wheat harvest, resulting in the shortage of packaged food, bread, pasta, and other household commodities.
President Biden and other world powers just announced plans to release 60 million barrels of oil from reserves in an attempt to ease gas prices. https://t.co/WWNnU3FzNx
— Brad Beauregard Jr 🇺🇸 (@BradBeauregardJ) March 1, 2022
Meanwhile, in order to avert the supply chain crisis and domestic tensions, the United States announced the release of 30 million barrels of crude oil reserves, along with an equal amount of reserves to be released by other countries combined.
While this may seem to be a move to stabilize prices, experts are suggesting the previous releases did not produce encouraging results.