On the morning of February 24th, 20222, Russian President Vladimir Putin announced military operations in Ukraine and warned other countries that any attempt to interfere with Russian activity will result in retaliation.
Following Putin’s threat of invading Ukraine’s border, financial markets around the world plummeted. During early trade on Thursday, February 24th, the Sensex fell by about 2,000 points. Nifty, on the other hand, had fallen nearly 570 points to below 16,500.
The gold prices in the domestic (Indian) market also crossed Rs 51,400, highest in the last few months.
Russia is the world’s second-largest crude oil exporter and the world’s largest supplier of natural gas, which is essential for heating homes, powering airlines, and filling cars with fuel.
Oil marketing organisations are likely to revise fuel prices soon as the Brent crude oil price climbs to new highs. Experts in the field anticipate that once the state assembly elections in India get over in early March, petrol and diesel prices will skyrocket.
In 2021, India imported 43,400 barrels per day of oil from Russia (about 1% of total imports), while coal imports from Russia totaled 1.8 million tonnes, or 1.3% of total coal imports. India purchases 2.5 million tonnes of LNG per year from Russia’s Gazprom.
Russia and Ukraine, dubbed “Europe’s bread basket,” export a quarter of the world’s wheat and half of the world’s sunflower products, such as seeds and oil.
Last year, more than 40% of Ukraine’s wheat and corn exports went to the Middle East or Africa, and supply delays could influence availability in these regions. The ongoing war will wreak havoc on food output and perhaps quadruple global wheat prices.
Russia is also one of the world’s leading fertiliser exporters. Because they were in short supply last year, their price has already risen, and farmers may have to spend even more to obtain them and grow their crops.
The Ministry of External Affairs is running a 24X7 control room to offer assistance to stranded Indians in Ukraine. There are about 30,000 Indians living in Ukraine, of which close to 15,000 of them are medical students.
Kyiv’s Zhuliany airport cancelled flights, and the government shuts the Ukrainian airspace, leaving many Indians stranded. Flight tickets were at a record high. India is operating repatriation flights from neighbouring countries like Poland and Romania.
The United Kingdom announced the invasion of Ukraine, promising decisive action with international allies as Russian forces launched an assault on Ukraine.
The European Union (EU) approved to freeze the European assets linked to Russian President Vladimir Putin and Foreign Minister Sergei Lavrov.
Russia was stripped of hosting the Champions League final by UEFA with St Petersburg replaced by Paris. Formula One has pulled its race from Russia. The Russian Grand Prix was scheduled for September 25.
Import costs may rise
India relies on the global market for about 85% of its requirements. Rise in consumption in India may jack up import costs.
Opportunities in biofuel
The government may focus on converting more sugar and grains into biofuel to reduce its dependence on overseas supplies and cut bulging sugar stockpiles.
Effects on Forex
There will be fluctuations in Dollar value, which will see exporters gain more value and importers having to pay more.
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