According to US sources, Russia has spent weeks bolstering armed forces nearby eastern Ukraine, with more than 150,000 troops surrounding Ukraine in Belarus and on the Russian border. As the battle unfolds on a global scale, Americans are confused about how the United States should respond. According to a recent Quinnipiac University survey, 57% of Americans believe the US should not send soldiers into Ukraine if Russia invades, while 54% back Biden's choice to deploy troops to protect NATO members.

President Joe Biden spoke to the American people earlier this week, reiterating that the US will not send soldiers to defend Ukraine. However, he vowed to protect "every inch" of NATO territory, with thousands more troops already sent to Europe, as well as to provide lethal defense weapons, economic help, and the severe US and ally sanctions on Russia to the Ukrainian people and the government.

The Business and Economic Impact

While uncertainty reigns, experts believe that a war between Russia and Ukraine will not pose a significant threat to US business. Following Russian President Vladimir Putin's announcement of a military campaign in Ukraine's eastern Donbas area, Western corporations with interests in Russia and Ukraine are bracing for the potential effect of new sanctions.

A likely Russian invasion of Ukraine would have impacts across a range of markets, from wheat and oil prices to sovereign dollar bonds, as well as safe investments and stock markets. Any disruption in the movement of grain out of the Black Sea area is expected to have a significant influence on pricing and fuel inflation at a time while affordability is a major problem throughout the world as a result of the COVID-19 pandemic's economic harm.

Ukraine, Romania, Russia, and Kazakhstan, four key exporters, ship grain from Black Sea ports that might be disrupted by military intervention or sanctions. According to estimates from the International Grains Council, Ukraine is expected to be the third biggest exporter of maize and the fourth biggest exporter of wheat grain in the 2021/22 season. Russia is the world's leading exporter of wheat.

Oil and Natural Gas

If tensions escalate into a war, energy markets are prone to be affected. Around 35 percent of Europe's natural gas comes from Russia, largely via pipelines that run via Belarus and Poland towards Germany. The Nord Stream 1, runs straight to Germany, and others via Ukraine.

Gas flows from Russia to Europe decreased in 2020 when demand was restricted by lockdowns and did not completely recover last year when consumption soared, helping to drive prices to new highs. The rise in prices of fuel can significantly harm the logistics industry and thereby create an impact on e-commerce businesses. Oil markets may also be impacted by restrictions or disruptions. Ukrainian oil is transported to Slovakia, Hungary, and the Czech Republic. According to JPMorgan Chase & Co., an American multinational investment bank and financial services holding company said “ The tensions may lead to a "substantial jump" in oil prices, with a rise to $150 a barrel reducing global GDP growth to only 0.9 percent annualized in the first half of the year and more than doubling inflation to 7.2 percent.

Build An Engaging App For Free

Get Started

Impact On Tech Exports

Exports of high-tech items, including innovative microchips and devices containing them, are also expected to be halted in the West. This would not just damage Russian consumers; the loss of Russian markets will lower worldwide demand for similar items, impacting countries that make them if they rely on Russian sales.

Conclusion

As the conflict between Ukraine and Russia grows, a world economy already recuperating from Covid-19 confronts new threats from an energy price surge. Despite the war conflict, the Russian economy will suffer a considerable contraction. As the Russian economy weakens, this will have a greater impact on Asian countries with major trade links with Moscow. With rising inflation in many developed economies, this conflict will have a depressing effect on global manufacturing, causing downtimes in many countries.