Written by Marijn Overvest | Reviewed by Sjoerd Goedhart | Fact Checked by Ruud Emonds | Our editorial policy

Russia’s Ongoing War With Ukraine

According to the World Trade Organization (WTO), Russia’s invasion of Ukraine has created immense human suffering. It has also damaged global trade and the WTO warns that low-income countries will be affected the most. 

The World Trade Organization says that the prospects for the global economy have darkened since the war started on February 24, 2022. Many economists have now downgraded their expectations for 2022 growth of merchandise trade volumes from 4.7% to 3%. 

In a crisis, the World Trade Organization (WTO) states that trade is needed so everyone can acquire essential supplies. It is calling the attention of governments and other partnered organizations to work together to facilitate trade.

The war has seriously affected the international trade system that prevented the world from recovering from the shocks caused by the COVID-19 pandemic. According to the United Nations Conference on Trade and Development, rising prices inflate international trade. The value of trade in the first quarter of 20922 has increased with energy, metals, and chemicals as major drivers. 

The war between Russia and Ukraine has exposed all the vulnerabilities of the world economy and global trade that did not get enough time to recover from the effects of the pandemic. 

Food Security Crisis

Ukraine is one of the key players in the world markets for sunflower oil, sunflower seeds, barley, wheat, corn, and colza seeds. It was also one of the World Food Programme’s (WFP) top wheat suppliers before the war began. 

Russia’s strategy of blocking Ukraine’s Black Seaports had driven up food prices and created bottlenecks in food commodity supply chains that prevented Ukraine from fully utilizing its exporting capacities. 

Although there are alternatives such as using railway routes and other European seaports, it is not a perfect solution for the bottleneck that Russia caused in Ukraine

United Nations Conference on Trade and Development’s (UNCTAD) calculations have shown that price increases on food resulting from the war can go up as high as more than  5% of the import basket of the poorest countries. 

Although Ukraine’s Black Sea ports have been unlocked due to the grain export deal, it is only a partial solution to alleviate the food security crisis. 

Rising Energy and Fertilizer Prices

Fertilizers have doubled their prices since the Ukraine war began and energy prices are increasing. The World Bank states that the current energy crisis differs from the energy prices that rattled the 1970s.

Although COVID-19 has sparked an increase in oil and coal prices, the current energy crisis is due to the war between Russia and Ukraine. This is due to the fact that Russia is the world’s largest exporter of natural gas and a leading supplier of coal and crude oil. 

Russia started increasing the price of natural gas for the European Union (EU) and will continue to rise as long as the war continues. As winter approaches, the European Union is yet to test its initiatives in cutting its dependency on Russia’s natural gas. 

Conclusion

Fertilizers have doubled their prices ever since the Ukraine war began and energy prices are increasing. The World Bank states that the current energy crisis is different from the energy prices that rattled the 1970s.

Although COVID-19 has sparked an increase in oil and coal prices, the current energy crisis is due to the war between Russia and Ukraine. This is due to the fact that Russia is the world’s largest exporter of natural gas and a leading supplier of coal and crude oil. 

Russia started increasing the price of natural gas for the European Union (EU) and it will continue to rise as long as the war continues. As winter approaches, the European Union is yet to test its initiatives in cutting its dependency on Russia’s natural gas.