Russia-Ukraine Tensions — Adding further to Inflation worries?

Tensions between Russia and Ukraine are at their highest in years. These geopolitical issues between Russia and Ukraine have kept investors on the edge in the past few days. Let us see how these issues are likely to impact the stock market.

To start with we need to know “What is the Russia-Ukraine Issue”?

• 1991 — Ukraine became independent as USSR broke up. It was a part of the Russian empire for centuries before becoming the Soviet Republic.
• 2014 — Ukrainian President rejected an association agreement with the European Union in favor of closer ties with Moscow. This led to mass protests and Russia responded by annexing Ukraine’s Crimean Peninsula and throwing its weight behind a separatist insurgency that broke out in Ukraine’s East.
• 2015 — A peace agreement brokered by France and Germany helped to end large-scale battles but failed to reach a political settlement.
• Current — Russia accused Ukraine of failing to honor the 2015 deal. Russia had troops deployed on the borders since 2021. The issue got escalated with Putin ordering troops into two pro-Russian, breakaway regions in Eastern Ukraine on the 21st of this month. In response, U.S. and allies announced sanctions on Russia. On Thursday Russia launched a military offensive against Ukraine. Ukrainian capital Kyiv and other cities were hit by airstrikes and Russian troops crossed the borders in several parts of the country.

How it may impact inflation?

• Russia is a major exporter of crude oil, accounting for about 12% of the world’s supply. U.S. imports approximately 7% of its daily crude and other petroleum products from Russia.

• On the other hand, Russia along with U.S. and Qatar form 70% of LPG received to Europe in 2021.

• In addition to energy, Russia is also the world’s top exporter of wheat, as well as a large producer of commodities, such as copper, nickel and platinum — all used in electric vehicles and electronics manufacturing.

Along with the supply chain issues which has already grappled the economy, a supply shock from the war will add fuel to the fire, meaning it will add to the already existing inflation in the U.S.

Read more about the blog here: https://www.xanaradvisors.com/russia-ukraine-tensions-adding-further-to-inflation-worries/