Amid escalating tensions between Ukraine and Russia, with some quarters claiming an 'invasion' was under way, Indian consumers may too feel the hit from the crisis in the nothern Europe.
As India on Tuesday, without commenting on Russia, called for "de-escalation" of the situation at the UN Security Council, the effect of a Russian invasion of Ukraine may impact India with regard to the following commodities:
Gas, oil and fuel
Experts in many quarters have predicted manifold increase in gas prices, based on the fact that the crisis pushed price of brent crude closer to $100 per barrel, the highest since 2014.
Spike in crude oil prices to $150 per barrel—according to an analysis by JP Morgan—would adversely impact global GDP, by reducing its growth to just 0.9 per cent.
Crude and related products account for over 9 per cent in the Wholesale Price Index, due to which a spike in brent crude prices will worsen inflation in India. Subsequently, prices of LPG, CNG and even elctricity may see a spike as Russia accounts for around 17 per cent of the global natural gas production.
A knockdown effect of high crude prices would be felt in the cost of petrol and diesel across India, surpassing the record high prices witnessed over 2021, as oil accounts for around 25 per cent of India's total imports, with over 80 per cent of oil imported in the country.
The Indian sunflower oil industry is worried that the escalation of tensions between Russia and Ukraine could delay the import and raise the price of the popular edible oil. Ukraine and Russia together meet about 90 per cent of India’s sunflower oil needs. If things go awry, prices could sky-rocket, industry watchers warned on Tuesday.
There was already a delay in the shipment of the essential oil, they told DH. “We are very anxious and are watching the situation carefully. A slight delay is fine but if it (supply) stops then there will be a shortage and prices can go haywire,” said Sandeep Bajoria, the CEO of Sunvin Group, a consultancy in oils and oilseeds.
Out of the total sunflower oil import of 25 lakh tonnes, Ukraine supplies 17 lakh, Russia sends 2 lakh and Argentina ships 3 lakh, Bajoria said, pegging India’s sunflower oil trade with the two countries at roughly $3 billion.
Besides, the northern European nation is also among the world's top-most exporters of wheat, with Russia and Ukraine accounting for a quarter of the total global exports.
Precious metals, such as gold, as well as those used in industries are expected to be hit hard by the Russia-Ukraine conflict.
Palladium, which is extensively used in automotive exhaust systems and other technologies, such as smartphones, is getting costlier by the day amid fears of sanctions on Russia, which is the top global exporter.
Meanwhile, gold, which is dear to Indians, is already getting costlier after Putin decided to deploy troops in the breakaway regions of Donetsk and Luhansk. According to reports, spot gold hit its highest since June 1 of 2021, reaching $1,919.89 per ounce. US gold futures GCv1 gained 0.6 per cent, to $1,911.50.
Among the other important metals that may be hit are aluminium, cobalt and copper. Russia accounts for approximately six per cent of global aluminium supply, with prices rising about 15 per cent in February. Russia also accounts for 3.5 per cent of the global refined copper production, at 9.2 lakh tonnes in 2021. On the same lines, Russia produced 7,600 tonnes of cobalt last year, more than 4 per cent of the world total, according to the US Geological Survey.
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