![Russian vodka boycott Raley's](https://upload.wikimedia.org/wikipedia/commons/7/74/Russian_vodka_boycott_Raley%27s.jpg)
The economic impact of the
2022 Russian invasion of Ukraine
On 24 February 2022, in a major escalation of the Russo-Ukrainian War, which began in 2014. The invasion has resulted in tens of thousands of deaths on both sides. It has caused Europe's largest refugee crisis since World War II. An ...
began in late February 2022, in the days after
Russia
Russia (, , ), or the Russian Federation, is a List of transcontinental countries, transcontinental country spanning Eastern Europe and North Asia, Northern Asia. It is the List of countries and dependencies by area, largest country in the ...
recognized two breakaway Ukrainian republics and launched an invasion of Ukraine. The
subsequent economic sanctions have targeted large parts of the
Russian economy
The economy of Russia has gradually transformed from a planned economy into a mixed market-oriented economy.
—Rosefielde, Steven, and Natalia Vennikova. “Fiscal Federalism in Russia: A Critique of the OECD Proposals.” Cambridge Journa ...
,
Russian oligarch
Russian oligarchs (Russian language, Russian: олигархи, Romanization of Russian, romanized: ''oligarkhi'') are business oligarchs of the Post-Soviet states, former Soviet republics who rapidly accumulated wealth in the 1990s via the Priv ...
s, and members of the
Russian government
The Government of Russia exercises executive power in the Russian Federation. The members of the government are the prime minister, the deputy prime ministers, and the federal ministers. It has its legal basis in the Constitution of the Russia ...
.
Russia has responded with sanctions of its own. Both the conflict and the sanctions have had a strongly negative impact on the world economic recovery during the
COVID-19 recession
The COVID-19 recession, also referred to as the Great Lockdown, is a global recession, global economic recession caused by the COVID-19 pandemic. The recession began in most countries in February 2020.
After a year of global economic slowdown ...
. As a result of its war, estimates of a 30-year economic setback are projected for Russia. A wave of protests and
strikes have occurred across Europe against the rise of bills and living expenses.
The war in Ukraine has also resulted in significant loss of human capital, destruction of agricultural trading infrastructure, huge damages to productive capacity, and a reduction in private consumption of more than a third relative to pre-war levels.
Background
Beginning in 2014, Russia has been facing sanctions over its
annexation of Crimea which had stunted the nation's economic growth.
In 2020, the
COVID-19 recession
The COVID-19 recession, also referred to as the Great Lockdown, is a global recession, global economic recession caused by the COVID-19 pandemic. The recession began in most countries in February 2020.
After a year of global economic slowdown ...
and the
oil price war with Saudi Arabia also affected the Russian economy. Additional sanctions occurred in the
lead-up to the invasion in 2021. The
Russian stock market declined by twenty percent during the military buildup.
History of economic impact
Kristalina Georgieva
Kristalina Ivanova Georgieva-Kinova ( bg, Кристалина Иванова Георгиева-Кинова; ; born 13 August 1953) is a Bulgarian economist serving as managing director of the International Monetary Fund since 2019. She was t ...
, the managing director of the
International Monetary Fund
The International Monetary Fund (IMF) is a major financial agency of the United Nations, and an international financial institution, headquartered in Washington, D.C., consisting of 190 countries. Its stated mission is "working to foster globa ...
(IMF), warned that the conflict posed a substantial economic risk for the region and internationally. She added that the IMF could help other countries impacted by the conflict, complementary to a $2.2 billion loan package being prepared to assist Ukraine.
David Malpass
David Robert Malpass (born March 8, 1956) is an American economic analyst and former government official serving as President of the World Bank Group since 2019. Malpass previously served as Under Secretary of the Treasury for International Affa ...
, the
president
President most commonly refers to:
*President (corporate title)
*President (education), a leader of a college or university
*President (government title)
President may also refer to:
Automobiles
* Nissan President, a 1966–2010 Japanese ful ...
of the
World Bank Group
The World Bank Group (WBG) is a family of five international organizations that make leveraged loans to developing countries. It is the largest and best-known development bank in the world and an observer at the United Nations Development Grou ...
, said that the conflict would have far-reaching economic and social effects, and reported that the bank was preparing options for significant economic and fiscal support to Ukrainians and the region.
Despite unprecedented international sanctions against Russia, payments for energy and raw materials were largely spared from these measures, as were food supplies because of the potential impact on world
food prices
Food prices refer to the average price level for food across countries, regions and on a global scale. Food prices have an impact on producers and consumers of food.
Price levels depend on the food production process, including food marketing ...
. Russia and Ukraine are major producers of wheat that is exported through the Bosporus to Mediterranean and North African countries. The expulsion of some Russian banks from SWIFT is expected to affect the country's exports. Due to the fact that Russia is the largest trading and economic partner for
post-Soviet states
The post-Soviet states, also known as the former Soviet Union (FSU), the former Soviet Republics and in Russia as the near abroad (russian: links=no, ближнее зарубежье, blizhneye zarubezhye), are the 15 sovereign states that wer ...
in
Central Asia
Central Asia, also known as Middle Asia, is a subregion, region of Asia that stretches from the Caspian Sea in the west to western China and Mongolia in the east, and from Afghanistan and Iran in the south to Russia in the north. It includes t ...
and a major destination for millions of
CIS
Cis or cis- may refer to:
Places
* Cis, Trentino, in Italy
* In Poland:
** Cis, Świętokrzyskie Voivodeship, south-central
** Cis, Warmian-Masurian Voivodeship, north
Math, science and biology
* cis (mathematics) (cis(''θ'')), a trigonome ...
's migrant workers, Central Asia has been particularly hard hit by sanctions against Russia.
Sanctions also included asset freezes on the
Russian Central Bank
The Central Bank of the Russian Federation (CBR; ), doing business as the Bank of Russia (russian: Банк России}), is the central bank of the Russian Federation. The bank was established on July 13, 1990. The predecessor of the bank can ...
, which holds $630 billion in
foreign-exchange reserves
Foreign exchange reserves (also called forex reserves or FX reserves) are cash and other reserve assets such as gold held by a central bank or other monetary authority that are primarily available to balance payments of the country, influence ...
, to prevent it from offsetting the impact of sanctions. On 5 May, President of the European Council
Charles Michel
Charles Michel (; born 21 December 1975) is a Belgian politician serving as the president of the European Council since 2019. He previously served as the prime minister of Belgium between 2014 and 2019.
Michel became the minister of Developm ...
said: "I am absolutely convinced that this is extremely important not only to freeze assets but also to make possible to confiscate it, to make it available for the rebuilding" of Ukraine.
Russia
Economic sanctions affected Russia from the first day of the invasion, with the
stock market
A stock market, equity market, or share market is the aggregation of buyers and sellers of stocks (also called shares), which represent ownership claims on businesses; these may include ''securities'' listed on a public stock exchange, as ...
falling by up to 39% (
RTS Index
The RTS Index (RTSI; ) is a free-float capitalization-weighted index of 50 Russian stocks traded on the Moscow Exchange, calculated in US dollars. The index was introduced on September 1, 1995, with the formation of the Russian Trading System (RT ...
). The
Russian ruble
''hum''; cv, тенкĕ ''tenke''; kv, шайт ''shayt''; Lak: къуруш ''k'urush''; Mari: теҥге ''tenge''; os, сом ''som''; tt-Cyrl, сум ''sum''; udm, манет ''manet''; sah, солкуобай ''solkuobay''
, name_ab ...
fell to record lows, as Russians rushed to exchange currency. Stock exchanges in Moscow and St. Petersburg were suspended until at least 18 March, making it the longest closure in Russia's history. On 26 February,
S&P Global Ratings
S&P Global Ratings (previously Standard & Poor's and informally known as S&P) is an American credit rating agency (CRA) and a division of S&P Global that publishes financial research and analysis on stocks, bonds, and commodities. S&P is cons ...
downgraded the Russian government
credit rating
A credit rating is an evaluation of the credit risk of a prospective debtor (an individual, a business, company or a government), predicting their ability to pay back the debt, and an implicit forecast of the likelihood of the debtor defaulting.
...
to "junk", causing funds that require investment-grade bonds to dump Russian debt, making further borrowing very difficult for Russia.
The
Central Bank of Russia
The Central Bank of the Russian Federation (CBR; ), doing business as the Bank of Russia (russian: Банк России}), is the central bank of the Russian Federation. The bank was established on July 13, 1990. The predecessor of the bank can ...
announced
interventions
''Interventions'' is a book by Noam Chomsky, an American academic linguist and political activist. Published in May 2007, ''Interventions'' is a collection of 44 op-ed articles, post-9/11, from September 2002, through March 2007. The book's sub ...
, its first since the 2014 annexation of Crimea, to stabilise the market. On 28 February, it raised interest rates to 20% and banned foreigners from selling local securities. According to a former deputy chairman of the Russian central bank, the sanctions put the
Russian National Wealth Fund
The Russian National Wealth Fund is Russia's sovereign wealth fund. It was created after the Stabilization Fund of the Russian Federation was split into two separate investment funds on 30 January 2008.
Fund structure
The two funds are the R ...
at risk of disappearing. With the value of the Russian ruble and the share prices for Russian equities falling on major exchanges, the
Moscow Exchange
The Moscow Exchange (MOEX; rus, Московская биржа, r=Moskovskaya birzha, p=mɐˈskofskəjə ˈbʲirʐə, a=) is the largest exchange in Russia, operating trading markets in equities, bonds, derivatives, the foreign exchange market, ...
was closed for a day, which was afterwards extended to over a week. As of 28 February, the price of Russia's
credit default swap
A credit default swap (CDS) is a financial swap agreement that the seller of the CDS will compensate the buyer in the event of a debt default (by the debtor) or other credit event. That is, the seller of the CDS insures the buyer against som ...
s signalled about a 56% chance of default.
Fitch Ratings
Fitch Ratings Inc. is an American credit rating agency and is one of the " Big Three credit rating agencies", the other two being Moody's and Standard & Poor's. It is one of the three nationally recognized statistical rating organizations (NRSRO) ...
feared that Russia would imminently default on its debts.
![Countries which banned Russian aircraft from their airspace due to the 2022 Russian invasion of Ukraine](https://upload.wikimedia.org/wikipedia/commons/f/f5/Countries_which_banned_Russian_aircraft_from_their_airspace_due_to_the_2022_Russian_invasion_of_Ukraine.svg)
On 27 February,
BP, one of the world's seven largest oil and gas companies and the single largest foreign investor in Russia, announced it was divesting from
Rosneft
PJSC Rosneft Oil Company ( stylized as ROSNEFT) is a Russian Vertical integration, integrated energy company headquartered in Moscow. Rosneft specializes in the exploration, Extraction of petroleum, extraction, production, refining, Petroleum t ...
. The Rosneft interest comprised about half of BP's
oil and gas reserves and a third of its production. The divestment was projected to cost the company up to $25 billion, and analysts noted that it was unlikely that BP would be able to recover anywhere near the value of Rosneft. The same day, the
Government Pension Fund of Norway
The Government Pension Fund of Norway ( no, Statens pensjonsfond) comprises two entirely separate sovereign wealth funds owned by the government of Norway.
The Government Pension Fund Global, also known as the Oil Fund, was established in 1990 t ...
, the world's largest
sovereign wealth fund
A sovereign wealth fund (SWF), sovereign investment fund, or social wealth fund is a state-owned investment fund that invests in real and financial assets such as stocks, bonds, real estate, precious metals, or in alternative investments such ...
, announced that it would divest itself from its Russian assets. The fund owned about 25 billion
Norwegian krone
The krone (, abbreviation: kr (also NKr for distinction); code: NOK), plural ''kroner'', is currency of the Kingdom of Norway (including Svalbard). Traditionally known as the Norwegian crown in English. It is nominally subdivided into 100 '' ...
($2.83 billion) in Russian company shares and government bonds.
On 28 February,
Shell
Shell may refer to:
Architecture and design
* Shell (structure), a thin structure
** Concrete shell, a thin shell of concrete, usually with no interior columns or exterior buttresses
** Thin-shell structure
Science Biology
* Seashell, a hard o ...
also announced that it would be pulling its investments in Russia. On 1 March, the Italian energy company
Eni announced that it would cancel its investments into the
Blue Stream
Blue Stream is a major trans-Black Sea gas pipeline that carries natural gas to Turkey from Russia. The pipeline has been constructed by the Blue Stream Pipeline B.V., the Netherlands based joint venture of Russian Gazprom and Italian Eni. T ...
pipeline. The same day, the world's largest shipping companies,
Maersk
(), also known simply as Maersk (), is a Danish shipping company, active in ocean and inland freight transportation and associated services, such as supply chain management and port operation. Maersk was the largest container shipping line a ...
and
Mediterranean Shipping Company
Mediterranean Shipping Company S.A. (MSC) is an international shipping line founded by Gianluigi Aponte in Italy in 1970, with headquarters in Switzerland since 1978. The privately held company is owned by the Aponte family. It has been the lar ...
, suspended all container shipments to Russia, excluding foodstuffs, medical, and humanitarian supplies.
Russia is reportedly experiencing
brain drain due to
mass emigration of more than 300,000 mainly younger Russians, many of whom are tech industry professionals, to countries like Armenia, Georgia, and Turkey.
More than 50,000 Russian information technology specialists have left Russia. In response to sanctions in the entertainment industry, Russia is considering the legalisation of
software piracy.
Cyberattack
A cyberattack is any offensive maneuver that targets computer information systems, computer networks, infrastructures, or personal computer devices. An attacker is a person or process that attempts to access data, functions, or other restricted ...
s by unidentified global hackers have also been a problem for Russia. For example, a hacking of the
Russian Federal Air Transport Agency, ''Rosaviatsia'', in late March 2022 resulted in massive disruption and the agency switching back to the use of paper document flow and postal mail. Due to budget limitations, ''Rosaviatsia'' did not have the necessary
backups
In information technology, a backup, or data backup is a copy of computer data taken and stored elsewhere so that it may be used to restore the original after a data loss event. The verb form, referring to the process of doing so, is "wikt:back u ...
of the hacked data.
On 11 April,
Russian Railways
Russian Railways (russian: link=no, ОАО «Российские железные дороги» (ОАО «РЖД»), OAO Rossiyskie zheleznye dorogi (OAO RZhD)) is a Russian fully state-owned vertically integrated railway company, both manag ...
defaulted on 268 million dollars of bonds after failing to make payments on a
Swiss franc
The Swiss franc is the currency and legal tender of Switzerland and Liechtenstein. It is also legal tender in the Italian exclave of Campione d'Italia which is surrounded by Swiss territory. The Swiss National Bank (SNB) issues banknotes and the f ...
bond.
In late July 2022, the IMF upgraded Russia's GDP estimate by 2.5%, but some economists see a long-term problem for the Russian economy, and explain its resilience only by a short-term increase of energy prices. Russia was able to leverage its economic power by cutting gas supplies to Europe, and play up its agricultural might as the largest wheat exporter globally. By August 2022, Russia was selling almost as much oil as before its
invasion of the Ukraine. Sales to the
Middle East
The Middle East ( ar, الشرق الأوسط, ISO 233: ) is a geopolitical region commonly encompassing Arabian Peninsula, Arabia (including the Arabian Peninsula and Bahrain), Anatolia, Asia Minor (Asian part of Turkey except Hatay Pro ...
and Asia helped make up for declining exports to Europe, and due to the higher price, Moscow revenues were $20 billion monthly compared to $14.6 billion a year before (2021).
Despite
International sanctions during the Russo-Ukrainian War
International sanctions have been imposed against Russia and Crimea during the Russo-Ukrainian War by a large number of countries, including the United States, Canada, the European Union, and international organisations following the Russi ...
, Russian energy sales have increased in value, and its exports have expanded with new financing options and payment methods for international buyers. At the same time, Russian budget accumulated record deficit of 1.450 trillion rubles by August, mostly due to collapse of tax income from fossil fuel exports from 70 billion down to 33.7 billion rubles per month, with total reduction of monthly budget incomes by 10%. In September, Russian Ministry of Finance notified all public sectors of reduction in spending by 10%.
Some estimates suggest that reconstruction of the war-torn
annexed territories would cost Russia between $100 and $200 billion. The reconstruction of
Mariupol
Mariupol (, ; uk, Маріу́поль ; russian: Мариу́поль) is a city in Donetsk Oblast, Ukraine. It is situated on the northern coast (Pryazovia) of the Sea of Azov, at the mouth of the Kalmius River. Prior to the 2022 Russian i ...
alone will likely cost more than $14 billion. A state budget published on 29 September by the Kremlin revealed that 3.3 billion roubles (about $59 million USD) had been set aside to rebuild the regions.
In November 2022 it was reported that Russia had officially entered a recession as the
Federal State Statistics Service
The Federal State Statistics Service (russian: Федеральная служба государственной статистики (Росстат), ''Federal'naya sluzhba gosudarstvennoi statistiki (Rosstat)'') is the governmental statistics ...
had reported a national GDP loss for the second consecutive quarter.
According to various estimates, every day of the war in Ukraine costs Russia $500 million to $20 billion.
Ukraine
The
National Bank of Ukraine
National Bank of Ukraine ( uk, Національний банк України) or NBU ( uk, НБУ) is the central bank of Ukraine – a government body responsible for unified state policy in the field of country's monetary circulation, includ ...
suspended currency markets, announcing that it would fix the official exchange rate. The central bank also limited cash withdrawals to
₴100,000 per day and prohibited withdrawal in foreign currencies by members of the general public. The
PFTS Ukraine Stock Exchange stated on 24 February that trading was suspended due to the emergency events. On 10 April 2022, Bloomberg News service reported that the Ukrainian economic growth for 2022 is likely to suffer a sharp decline estimated at a 45% decrease in annual performance as a result of the Russian invasion.
Belarus
The value of Belarusian dollar denominated bonds due in 2027 fell to a record low of 6.5 cents from 88 cents prior to the invasion.
Armenia
The consequences of the conflict had both positive and negative effects on the
economy of Armenia
The Armenian economy contracted sharply in 2020, by 5.7%, mainly due to the 2020 Armenia-Azerbaijan war. In contrast it grew by 7.6 per cent in 2019, the largest recorded growth since 2007, while between 2012 and 2018 GDP grew 40.7%, and key ba ...
. One of the negative impacts of the war was that due to the influx of
Russian
Russian(s) refers to anything related to Russia, including:
*Russians (, ''russkiye''), an ethnic group of the East Slavic peoples, primarily living in Russia and neighboring countries
*Rossiyane (), Russian language term for all citizens and peo ...
migrants, the prices of the apartments in the center of
Yerevan
Yerevan ( , , hy, Երևան , sometimes spelled Erevan) is the capital and largest city of Armenia and one of the world's List of oldest continuously inhabited cities, oldest continuously inhabited cities. Situated along the Hrazdan River, Y ...
increased sharply on average 109,000
AMD
Advanced Micro Devices, Inc. (AMD) is an American multinational semiconductor company based in Santa Clara, California, that develops computer processors and related technologies for business and consumer markets. While it initially manufactur ...
per square. If before the war people could rent an apartment in the center of the capital (two-rooms and furnished to be more specific) for 500
Euros
The euro (symbol: €; code: EUR) is the official currency of 19 out of the member states of the European Union (EU). This group of states is known as the eurozone or, officially, the euro area, and includes about 340 million citizens . T ...
, in 2022 during the war the price has risen 50%.
Another negative effect of the Russian migrants who came to
Armenia
Armenia (), , group=pron officially the Republic of Armenia,, is a landlocked country in the Armenian Highlands of Western Asia.The UNbr>classification of world regions places Armenia in Western Asia; the CIA World Factbook , , and ''Ox ...
was the appreciation of AMD. According to Google Finance,
the exchange rate of dollar to dram was less than 400 AMD (395.2915 AMD more precise). The problems with the appreciation of the dram is that when Russians came into
Armenia
Armenia (), , group=pron officially the Republic of Armenia,, is a landlocked country in the Armenian Highlands of Western Asia.The UNbr>classification of world regions places Armenia in Western Asia; the CIA World Factbook , , and ''Ox ...
, they fueled the demand for dram and this, combined with the fact that the exchange rate of the
USD
The United States dollar (symbol: $; code: USD; also abbreviated US$ or U.S. Dollar, to distinguish it from other dollar-denominated currencies; referred to as the dollar, U.S. dollar, American dollar, or colloquially buck) is the official ...
decreased, the appreciation of the AMD made the products being exported to other countries less competitive.
The
IT sphere was also impacted, the fact partly also connected with the appreciation of
AMD
Advanced Micro Devices, Inc. (AMD) is an American multinational semiconductor company based in Santa Clara, California, that develops computer processors and related technologies for business and consumer markets. While it initially manufactur ...
. The number of
Russian
Russian(s) refers to anything related to Russia, including:
*Russians (, ''russkiye''), an ethnic group of the East Slavic peoples, primarily living in Russia and neighboring countries
*Rossiyane (), Russian language term for all citizens and peo ...
IT workers in Armenia increased, creating a competition amongst local IT workers and Russians. While that led to a higher supply of labor in the IT sphere, the competition created by it caused local Armenian IT workers to leave their jobs or to work as
freelancers
''Freelance'' (sometimes spelled ''free-lance'' or ''free lance''), ''freelancer'', or ''freelance worker'', are terms commonly used for a person who is self-employed and not necessarily committed to a particular employer long-term. Freelance ...
, which means that they may work for another non-Armenian company and pay less
taxes
A tax is a compulsory financial charge or some other type of levy imposed on a taxpayer (an individual or legal entity) by a governmental organization in order to fund government spending and various public expenditures (regional, local, or ...
to the
Armenian Government
The politics of Armenia take place in the framework of the parliamentary representative democratic republic of Armenia, whereby the President of Armenia is the head of state and the Prime Minister of Armenia the head of government, and of a mul ...
.
During the Fall of 2022 Armenia also faced an aggression by the Azerbaijani armed forces. This event was similar to Ukraine's. The National Statistical Committee (NSC) issued official data that showed Armenia's GDP increased by 14.8% over the previous year during the third quarter. Economy Minister wrote "The economy has recovered quickly after the September shock". Information and communication sectors had the largest growth of 59.2% when compared to the same time in 2021; financial and insurance sectors expanded by 57.3%; and transportation and warehousing sectors rose by 41.3%. Wholesale and retail trade, auto and motorcycle repair (20%), building (19.9%), manufacturing (18%), administration and related sectors (16.2%), and lodging and catering (12.8%) also recorded high growth rates. The Armenian government forecasts their economy will grow by 7%, while inflation is projected at 4% (± 1.5%).
The World Bank's report released Sunday provides further details and numbers. In that report the World Bank revised its projection for Armenia's economic growth in 2022 from 5.3% to 1.2%, noting that "the impact of Russia's invasion of Ukraine on Armenia's economy is likely to be notably negative, but the scale remains undetermined." Sanctions and boycotts imposed by the European Union and the United States have harmed Armenia as Russia is a significant economic and investment partner for Armenia, accounting for around a third of recent exports and imports. Russian firms accounted for more than 40% of Armenia's "net foreign direct investment stock" in the previous year.
Remittances from Russia contribute for 5% of Armenia's GDP, and 40% of all tourists last year came from that country.
Further, Russia has a major influence over several of Armenia's important economic sectors, or even holds monopolies in some of them particularly in the areas of energy, minerals, and food. The World Bank report states that Russia is the source of all of Armenia's imports of wheat and gas. Remittances, trade, and investment are projected to suffer significantly in Armenia as a result of the Russian financial crisis and the ensuing collapse of the ruble. The price of food and other essentials has increased for Armenians due to global inflationary forces. With Armenia still battling to recover from the twin effects of a pandemic and a severe military defeat to Azerbaijan in 2020, the predicted economic damage from the conflict in Ukraine comes at a bad time for Armenia.
Armenia's economy shrank by a staggering 7.4% in 2020, in stark contrast to its 7.6% record growth in 2019. According to the World Bank's research, the country's economy only recovered by 5.7% on a year-over-year basis in the previous year, primarily due to private and public consumption. Shocks from the Ukraine conflict will cause the economy in the larger region of Europe and Central Asia to fall by more than 4% this year. By the end of the year, Russia’s economy is expected to shrink by over 11%, and Ukraine’s by over 45%, the bank predicts.
Commodities
![Natural gas prices Europe and US](https://upload.wikimedia.org/wikipedia/commons/4/40/Natural_gas_prices_Europe_and_US.webp)
Russia is the world's largest exporter of grains, natural gas, and
fertiliser
A fertilizer (American English) or fertiliser (British English; see spelling differences) is any material of natural or synthetic origin that is applied to soil or to plant tissues to supply plant nutrients. Fertilizers may be distinct from ...
s, and among the world's largest suppliers of
crude oil
Petroleum, also known as crude oil, or simply oil, is a naturally occurring yellowish-black liquid mixture of mainly hydrocarbons, and is found in geological formations. The name ''petroleum'' covers both naturally occurring unprocessed crude ...
and metals, including
palladium
Palladium is a chemical element with the symbol Pd and atomic number 46. It is a rare and lustrous silvery-white metal discovered in 1803 by the English chemist William Hyde Wollaston. He named it after the asteroid Pallas, which was itself na ...
,
platinum
Platinum is a chemical element with the symbol Pt and atomic number 78. It is a dense, malleable, ductile, highly unreactive, precious, silverish-white transition metal. Its name originates from Spanish , a diminutive of "silver".
Platinu ...
, gold,
cobalt
Cobalt is a chemical element with the symbol Co and atomic number 27. As with nickel, cobalt is found in the Earth's crust only in a chemically combined form, save for small deposits found in alloys of natural meteoric iron. The free element, pr ...
,
nickel
Nickel is a chemical element with symbol Ni and atomic number 28. It is a silvery-white lustrous metal with a slight golden tinge. Nickel is a hard and ductile transition metal. Pure nickel is chemically reactive but large pieces are slow to ...
, and aluminium. The invasion threatened the energy supply from Russia to Europe, with
natural gas prices
Natural gas prices, as with other commodity prices, are mainly driven by supply and demand fundamentals. However, natural gas prices may also be linked to the price of crude oil and petroleum products, especially in continental Europe. ...
in Europe reaching an all-time high of $3,700 per thousand cubic meters on 7 March at
ICE Futures, and
Brent oil
Brent Crude may refer to any or all of the components of the Brent Complex, a physically and financially traded oil market based around the North Sea of Northwest Europe; colloquially, Brent Crude usually refers to the price of the ICE (Intercon ...
prices
A price is the (usually not negative) quantity of payment or compensation given by one party to another in return for goods or services. In some situations, the price of production has a different name. If the product is a "good" in the c ...
rising above $130 a barrel for the first time since 2008. This caused European countries to seek to diversify their energy supply routes. On 7 March, German chancellor
Olaf Scholz
Olaf Scholz (; born ) is a German politician who has served as the chancellor of Germany since 8 December 2021. A member of the Social Democratic Party of Germany, Social Democratic Party (SPD), he previously served as Vice Chancellor of German ...
and other European leaders pushed back against the call by the US and Ukraine to ban imports of Russian gas and oil because "Europe's supply of energy for heat generation, mobility, power supply and industry cannot be secured in any other way". However, the EU indicated that it would cut its gas dependency on Russia by two-thirds in 2022.
At the time of the invasion, Ukraine was the fourth-largest exporter of corn and wheat, and the world's largest exporter of
sunflower oil
Sunflower oil is the non-volatile oil pressed from the seeds of the sunflower (''Helianthus annuus''). Sunflower oil is commonly used in food as a frying oil, and in cosmetic formulations as an emollient.
Sunflower oil is primarily composed ...
, with Russia and Ukraine together responsible for 29% of the world's
wheat exports and 75% of world sunflower oil exports.
On 25 February, the benchmark
Chicago Board of Trade
The Chicago Board of Trade (CBOT), established on April 3, 1848, is one of the world's oldest futures and options exchanges. On July 12, 2007, the CBOT merged with the Chicago Mercantile Exchange (CME) to form CME Group. CBOT and three other excha ...
March wheat futures contracts reached their highest price since 2012, with the prices of corn and soybean also spiking.
The head of the
World Food Programme
The World Food Programme; it, Programma alimentare mondiale; es, Programa Mundial de Alimentos; ar, برنامج الأغذية العالمي, translit=barnamaj al'aghdhiat alealami; russian: Всемирная продовольствен ...
,
David Beasley
David Muldrow Beasley (born February 26, 1957) is an American politician and the Executive Director of the United Nations World Food Programme. A member of the Republican Party, he served one term as the 113th Governor of South Carolina from 199 ...
, warned in March that the war in Ukraine could take the
global food crisis
Global means of or referring to a globe and may also refer to:
Entertainment
* ''Global'' (Paul van Dyk album), 2003
* ''Global'' (Bunji Garlin album), 2007
* ''Global'' (Humanoid album), 1989
* ''Global'' (Todd Rundgren album), 2015
* Bruno ...
to "levels beyond anything we've seen before". A potential disruption to global wheat supplies could exacerbate the ongoing
hunger crisis in Yemen, Afghanistan
and East Africa.
The supply of
neon
Neon is a chemical element with the symbol Ne and atomic number 10. It is a noble gas. Neon is a colorless, odorless, inert monatomic gas under standard conditions, with about two-thirds the density of air. It was discovered (along with krypton ...
, needed for chip manufacture and lasers, was also severely constrained by the conflict. Ukraine produces about 70% of the global neon supply, and 90% of the semiconductor-grade neon used in the United States.
The two largest suppliers in Ukraine, which together account for half of global neon production, were shuttered after the conflict broke out.
The supply of
krypton
Krypton (from grc, κρυπτός, translit=kryptos 'the hidden one') is a chemical element with the symbol Kr and atomic number 36. It is a colorless, odorless, tasteless noble gas that occurs in trace amounts in the atmosphere and is often ...
and
xenon
Xenon is a chemical element with the symbol Xe and atomic number 54. It is a dense, colorless, odorless noble gas found in Earth's atmosphere in trace amounts. Although generally unreactive, it can undergo a few chemical reactions such as the ...
, of which Ukraine is also a major exporter, was affected as well. On 31 March, in apparent retaliation against Western economic sanctions, Putin announced that Russia would stop supplying gas to Europe that was not paid for in rubles.
On 26 April,
Gazprom
PJSC Gazprom ( rus, Газпром, , ɡɐzˈprom) is a Russian majority state-owned multinational energy corporation headquartered in the Lakhta Center in Saint Petersburg. As of 2019, with sales over $120 billion, it was ranked as the larges ...
announced that gas supplies to Poland and Bulgaria would halt.
In April 2022, Russia supplied 45% of EU's gas imports, earning $900 million a day. In the first two months after Russia invaded Ukraine, Russia earned $66.5 billion from fossil fuel exports, and the EU accounted for 71% of that trade. The European Commission and
International Energy Agency
The International Energy Agency (IEA) is a Paris-based autonomous intergovernmental organisation, established in 1974, that provides policy recommendations, analysis and data on the entire global energy sector, with a recent focus on curbing carb ...
presented joint plans to reduce reliance on Russian energy, reduce Russian gas imports by two thirds within a year, and completely by 2030.
In May 2022, the
European Commission
The European Commission (EC) is the executive of the European Union (EU). It operates as a cabinet government, with 27 members of the Commission (informally known as "Commissioners") headed by a President. It includes an administrative body o ...
proposed and approved a partial ban on
oil imports from Russia, part of the economic response to the Russian invasion of Ukraine. On 18 May 2022, the European Union published plans to end its reliance on Russian oil, natural gas and coal by 2027. In June 2022, the United States government agreed to allow Italian company
Eni and Spanish company
Repsol
Repsol S.A.
El Nuevo Herald, 2012-05-31[Originally an init ...]
to import
oil from Venezuela to Europe to replace oil imports from Russia.
France negotiated with the
United Arab Emirates
The United Arab Emirates (UAE; ar, اَلْإِمَارَات الْعَرَبِيَة الْمُتَحِدَة ), or simply the Emirates ( ar, الِْإمَارَات ), is a country in Western Asia (The Middle East). It is located at th ...
to replace some Russian oil imports.
In June 2022, the European Union,
Egypt
Egypt ( ar, مصر , ), officially the Arab Republic of Egypt, is a transcontinental country spanning the northeast corner of Africa and southwest corner of Asia via a land bridge formed by the Sinai Peninsula. It is bordered by the Mediter ...
and
Israel
Israel (; he, יִשְׂרָאֵל, ; ar, إِسْرَائِيل, ), officially the State of Israel ( he, מְדִינַת יִשְׂרָאֵל, label=none, translit=Medīnat Yīsrāʾēl; ), is a country in Western Asia. It is situated ...
signed a natural gas agreement becoming part of a trilateral deal. The memorandum of understanding was announced by European commission president Ursula von der Leyen. However, the deal faced a few roadblocks like Green's Mounir Satouri, the European parliament’s lead MEP on Egypt threw light on EU’s relations with the latter in a letter written to von der Leyen, highlighting its dismal human rights record.
Impact on markets and economies
The 2022 attacks and the
subsequent economic sanctions had a severe impact on the Russian and Ukrainian economies, and decreased supply to some worldwide markets.
Cost of food and crops
Wheat
Wheat is a grass widely cultivated for its seed, a cereal grain that is a worldwide staple food. The many species of wheat together make up the genus ''Triticum'' ; the most widely grown is common wheat (''T. aestivum''). The archaeologi ...
prices surged to their highest prices since 2008 in response to the 2022 attacks. Ukraine accounted for 10% of global wheat exports. At the time of the invasion, Ukraine was the fourth-largest exporter of
corn
Maize ( ; ''Zea mays'' subsp. ''mays'', from es, maíz after tnq, mahiz), also known as corn (North American and Australian English), is a cereal grain first domesticated by indigenous peoples in southern Mexico about 10,000 years ago. Th ...
and wheat, and the world's largest exporter of
sunflower oil
Sunflower oil is the non-volatile oil pressed from the seeds of the sunflower (''Helianthus annuus''). Sunflower oil is commonly used in food as a frying oil, and in cosmetic formulations as an emollient.
Sunflower oil is primarily composed ...
, with Russia and Ukraine together responsible for 27% of the world's
wheat exports and 53% of the world's sunflowers and seeds. The head of the
World Food Programme
The World Food Programme; it, Programma alimentare mondiale; es, Programa Mundial de Alimentos; ar, برنامج الأغذية العالمي, translit=barnamaj al'aghdhiat alealami; russian: Всемирная продовольствен ...
,
David Beasley
David Muldrow Beasley (born February 26, 1957) is an American politician and the Executive Director of the United Nations World Food Programme. A member of the Republican Party, he served one term as the 113th Governor of South Carolina from 199 ...
, warned in March that the war in Ukraine could take the
global food crisis
Global means of or referring to a globe and may also refer to:
Entertainment
* ''Global'' (Paul van Dyk album), 2003
* ''Global'' (Bunji Garlin album), 2007
* ''Global'' (Humanoid album), 1989
* ''Global'' (Todd Rundgren album), 2015
* Bruno ...
to "levels beyond anything we've seen before".
A potential disruption to global wheat supplies could exacerbate the ongoing
hunger crisis in Yemen,
Afghanistan
Afghanistan, officially the Islamic Emirate of Afghanistan,; prs, امارت اسلامی افغانستان is a landlocked country located at the crossroads of Central Asia and South Asia. Referred to as the Heart of Asia, it is bordere ...
and
East Africa
East Africa, Eastern Africa, or East of Africa, is the eastern subregion of the African continent. In the United Nations Statistics Division scheme of geographic regions, 10-11-(16*) territories make up Eastern Africa:
Due to the historical ...
. The American Bakers Association president warned that the price of anything made with
grain
A grain is a small, hard, dry fruit (caryopsis) – with or without an attached hull layer – harvested for human or animal consumption. A grain crop is a grain-producing plant. The two main types of commercial grain crops are cereals and legum ...
would begin rising as all the grain markets are interrelated. The chief agricultural economist for
Wells Fargo
Wells Fargo & Company is an American multinational financial services company with corporate headquarters in San Francisco, California; operational headquarters in Manhattan; and managerial offices throughout the United States and intern ...
stated that Ukraine will likely be severely limited in their ability to plant crops in spring 2022 and lose an agricultural year, while an embargo on Russian crops would create more inflation of food prices. Recovering crop production capabilities may take years even after fighting has stopped.
Surging wheat prices resulting from the conflict have strained African countries such as
Egypt
Egypt ( ar, مصر , ), officially the Arab Republic of Egypt, is a transcontinental country spanning the northeast corner of Africa and southwest corner of Asia via a land bridge formed by the Sinai Peninsula. It is bordered by the Mediter ...
, which are highly dependent upon
Russian
Russian(s) refers to anything related to Russia, including:
*Russians (, ''russkiye''), an ethnic group of the East Slavic peoples, primarily living in Russia and neighboring countries
*Rossiyane (), Russian language term for all citizens and peo ...
and
Ukrainian wheat exports, and have provoked fears of social unrest. At least 25 African countries import a third of their wheat from Russia and Ukraine, and 15 of them import more than half from those two countries. On 24 February, the Chinese government announced that it would drop all restrictions on Russian wheat as part of an agreement that had been reached earlier in February; the ''
South China Morning Post
The ''South China Morning Post'' (''SCMP''), with its Sunday edition, the ''Sunday Morning Post'', is a Hong Kong-based English-language newspaper owned by Alibaba Group. Founded in 1903 by Tse Tsan-tai and Alfred Cunningham, it has remained ...
'' called this a potential "lifeline" for the Russian economy.
On 4 March, the
Food and Agriculture Organization
The Food and Agriculture Organization of the United Nations (FAO)french: link=no, Organisation des Nations unies pour l'alimentation et l'agriculture; it, Organizzazione delle Nazioni Unite per l'Alimentazione e l'Agricoltura is an intern ...
(FAO) of the United Nations reported that the world Food Price Index reached an all-time high in February, posting a 24% year-over-year increase. Most of the data for the February report was compiled before the invasion, but analysts said a prolonged conflict could have a major impact on grain exports.
On 30 March, at a United Nations meeting, the
United States Deputy Secretary of State
The deputy secretary of state of the United States is the principal deputy to the United States Secretary of State, secretary of state. The current deputy secretary of state is Wendy Ruth Sherman, serving since April 2021 under United States Secre ...
Wendy Sherman
Wendy Ruth Sherman (born June 7, 1949) is an American diplomat who is serving as the United States Deputy Secretary of State since April 2021. She was a professor of the practice of public leadership and director of the Center for Public Leaders ...
stated that the 2022 Russian invasion of Ukraine, including the naval
blockade of Ukraine's sea ports
A blockade is the act of actively preventing a country or region from receiving or sending out food, supplies, weapons, or communications, and sometimes people, by military force.
A blockade differs from an embargo or sanction, which are le ...
and armed attacks on civilian cargo ships, created a critical food shortage in Ukraine, with worldwide ramifications. In addition, potential food and
fertiliser
A fertilizer (American English) or fertiliser (British English; see spelling differences) is any material of natural or synthetic origin that is applied to soil or to plant tissues to supply plant nutrients. Fertilizers may be distinct from ...
export difficulties encountered by the Russian Federation – the major exporter of
potash
Potash () includes various mined and manufactured salts that contain potassium in water-soluble form. ,
ammonia
Ammonia is an inorganic compound of nitrogen and hydrogen with the formula . A stable binary hydride, and the simplest pnictogen hydride, ammonia is a colourless gas with a distinct pungent smell. Biologically, it is a common nitrogenous was ...
,
urea
Urea, also known as carbamide, is an organic compound with chemical formula . This amide has two amino groups (–) joined by a carbonyl functional group (–C(=O)–). It is thus the simplest amide of carbamic acid.
Urea serves an important r ...
and other soil nutrients – as a result of economic sanctions could jeopardise the
food security
Food security speaks to the availability of food in a country (or geography) and the ability of individuals within that country (geography) to access, afford, and source adequate foodstuffs. According to the United Nations' Committee on World F ...
of many countries.
Rising energy prices are also pushing agricultural costs higher, contributing to increasing food prices globally.
The agriculture and food industries use energy for various purposes. Direct energy use includes electricity for automated water irrigation, fuel consumption for farm machinery and energy required at various stages of food processing, packaging, transportation and distribution. The use of pesticides and mineral fertilisers results in large quantities of indirect energy consumption, with these inputs being highly energy intensive to manufacture.
While the share varies considerably between regions – depending on factors such as weather conditions and crop types – direct and non-direct energy costs can account for 40% to 50% of total variable costs of cropping in advanced economies such as the United States. Higher energy and fertiliser prices therefore inevitably translate into higher production costs, and ultimately into higher food prices.
In May 2022, the
FAO
The Food and Agriculture Organization of the United Nations (FAO)french: link=no, Organisation des Nations unies pour l'alimentation et l'agriculture; it, Organizzazione delle Nazioni Unite per l'Alimentazione e l'Agricoltura is an intern ...
estimated that "at least 20 percent of Ukraine's winter crops" "
may not be harvested or planted". The
food system
The term food system describes the interconnected systems and processes that influence nutrition
Nutrition is the biochemical and physiological process by which an organism uses food to support its life. It provides organisms with nutrients ...
-related
environmental impacts of the war may include long-term harm to Ukraine's soil.
Export agreements
The United Nations, Russia, Ukraine, and Turkey signed agreements on July 22, 2022, intended to secure exports via the Black Sea of grain from both countries and fertilizer from Russia, to ease
shortages in developing countries. The next day, Russia fired missiles at the port city of Odessa, through which Ukrainian grain flows. On September 7, 2022, Putin announced his intent to revise the terms of the grain export agreement.
Management
Scientists cautioned that policy-makers should not abandon
sustainable farming practices to increase grain production in response to resulting
food insecurity
Food security speaks to the availability of food in a country (or geography) and the ability of individuals within that country (geography) to access, afford, and source adequate foodstuffs. According to the United Nations' Committee on World F ...
, but change "the demand side which can
lsolead to both a more resilient and more
sustainable global food system" – such as limiting the import of
animal feed
Animal feed is food given to domestic animals, especially livestock, in the course of animal husbandry. There are two basic types: fodder and forage. Used alone, the word ''feed'' more often refers to fodder. Animal feed is an important input to ...
(e.g. as meat-production requires relatively large amounts of needed foods and
of agricultural land) – and e.g. expanding wheat production in high-productivity areas. Possible major policy-based actions that could mitigate the energy and resource crises caused or exacerbated by the war could include demand-side focused measures, worded briefly as (facilitating people to) "grow more food and less fodder, drive and fly less, turn down the thermostat".
Energy and oil
![Nordstream](https://upload.wikimedia.org/wikipedia/commons/5/58/Nordstream.png)
In January 2022, Russia produced 11.3 million barrels per day (Mb/d) of crude oil and condensate, of which 10Mb/d was crude oil. This makes Russia the world’s third largest producer of oil, surpassed only by the United States and Saudi Arabia (in the same period, they produced 17.6 Mb/d and 12 Mb/d, respectively). However, Russia is the largest exporter of oil products to global markets and the second
largest exporter of crude, after Saudi Arabia. Russia exported 7.8 Mb/d in December 2021, including 5Mb/d of crude.
Within the initial two weeks of the invasion, prices in global oil markets had surged by US$8 per barrel,
pushing prices for Brent oil above $100 a barrel for the first time since 2014. On 27 February,
BP, one of the world's seven largest oil and gas companies and the single largest foreign investor in Russia, announced it was divesting its 19.75% stake in
Rosneft
PJSC Rosneft Oil Company ( stylized as ROSNEFT) is a Russian Vertical integration, integrated energy company headquartered in Moscow. Rosneft specializes in the exploration, Extraction of petroleum, extraction, production, refining, Petroleum t ...
. The Rosneft interest comprises about half of BP's
oil and gas reserves and a third of its production. The divestment may cost the company up to $25 billion and analysts noted that it was unlikely that BP would be able to recover a fraction of this cost. The same day, the
Government Pension Fund of Norway
The Government Pension Fund of Norway ( no, Statens pensjonsfond) comprises two entirely separate sovereign wealth funds owned by the government of Norway.
The Government Pension Fund Global, also known as the Oil Fund, was established in 1990 t ...
, the world's largest
sovereign wealth fund
A sovereign wealth fund (SWF), sovereign investment fund, or social wealth fund is a state-owned investment fund that invests in real and financial assets such as stocks, bonds, real estate, precious metals, or in alternative investments such ...
, announced that it would freeze investment in Russia and divest its Russian assets. Before the invasion, the fund owned about 25 billion
Norwegian krone
The krone (, abbreviation: kr (also NKr for distinction); code: NOK), plural ''kroner'', is currency of the Kingdom of Norway (including Svalbard). Traditionally known as the Norwegian crown in English. It is nominally subdivided into 100 '' ...
($2.83 billion) in Russian company shares and government bonds.
On 28 February, as a result of the invasion, the Government of Canada announced a ban on Russian crude oil imports to Canada; according to the Government of Canada it was not importing crude oil from Russia at the time when the ban was announced.
![Russian crude and oil product exports, Jan 2020-Dec 2021](https://upload.wikimedia.org/wikipedia/commons/7/78/Russian_crude_and_oil_product_exports%2C_Jan_2020-Dec_2021.png)
On 2 March the stocks of
Gazprom
PJSC Gazprom ( rus, Газпром, , ɡɐzˈprom) is a Russian majority state-owned multinational energy corporation headquartered in the Lakhta Center in Saint Petersburg. As of 2019, with sales over $120 billion, it was ranked as the larges ...
, Rosneft and
Lukoil
The PJSC Lukoil Oil Company ( stylized as LUKOIL or ЛУКОЙЛ in Cyrillic script) is a Russian multinational energy corporation headquartered in Moscow, specializing in the business of extraction, production, transport, and sale of petrol ...
which have secondary listings in London had lost respectively 99.2%, 88.1% and 99.6% of their value year-to-date.
In September 2021 Lukoil and Rosneft had a combined market capitalization of $140 billion, by 2 March their combined market cap stood at just $9.3 billion, erasing $130 billion in value. Due to low demand for Russian crude, the benchmark Russian Crude Oil
Urals oil
Urals oil is a reference oil brand used as a basis for pricing of the Russian export oil mixture. It is a mix of heavy sour oil of Urals and the Volga region with light oil of Western Siberia. Other reference oils are Brent, West Texas Interme ...
was trading at a $18 discount to Brent and still struggling to find purchasers as oil traders feared sanctions.
Prior to the sanctions, about 60 percent of Russia’s oil exports went to European
OECD
The Organisation for Economic Co-operation and Development (OECD; french: Organisation de coopération et de développement économiques, ''OCDE'') is an intergovernmental organisation with 38 member countries, founded in 1961 to stimulate e ...
member countries. As of November 2021, Russia accounted for 34 percent of European oil imports.
It was estimated by the consultancy Energy Aspects that up to 70% of Russian Crude was "struggling to find buyers" as its normal export market of Europe sought crude instead from the Middle East. While sanctions and the toxicity of being seen to do business in Russia were major risk factors, another was the difficulty of the wartime situation in the Black Sea. This led to major shipping companies requiring war insurance for tankers picking up from
Novorossiysk
Novorossiysk ( rus, Новоросси́йск, p=nəvərɐˈsʲijsk; ady, ЦIэмэз, translit=Chəməz, p=t͡sʼɜmɜz) is a city in Krasnodar Krai, Russia. It is one of the largest ports on the Black Sea. It is one of the few cities hono ...
, Russia's primary oil export terminal. The difficulties of insurance also affected Kazakh crude which uses Novorossiysk for its
Tengiz field
Tengiz field ( kk, Теңіз мұнай кен орны, ''Teñız mūnai ken orny''; Tengiz is Turkic for "sea") is an oil field located in northwestern Kazakhstan's low-lying wetlands along the northeast shores of the Caspian Sea. It covers ...
.
![Gas price display outside Boston, May 2022](https://upload.wikimedia.org/wikipedia/commons/2/21/Gas_price_display_outside_Boston%2C_May_2022.jpg)
As of November 2021, Russian oil accounted for 17 percent of total imports in OECD Americas (625 kb/d).
On 8 March US President
Joe Biden announced a ban on oil from Russia, telling reporters, "We're banning all imports of Russian oil and gas energy. That means Russian oil will no longer be acceptable in US ports and the American people will deal another powerful blow to Putin's war machine."
Germany
Germany,, officially the Federal Republic of Germany, is a country in Central Europe. It is the second most populous country in Europe after Russia, and the most populous member state of the European Union. Germany is situated betwe ...
's Minister for Economic Affairs
Robert Habeck
Robert Habeck (; born 2 September 1969) is a German politician and writer who has been serving as Vice Chancellor of Germany, Federal Ministry for Economic Affairs and Climate Action, Federal Minister for Economic Affairs and Climate Action in ...
cautioned, "If we do not obtain more gas next winter and if deliveries from Russia were to be cut then we would not have enough gas to heat all our houses and keep all our industry going."
In the first three months since the start of the invasion of Ukraine, Russia earned $24 billion from selling energy to
China
China, officially the People's Republic of China (PRC), is a country in East Asia. It is the world's most populous country, with a population exceeding 1.4 billion, slightly ahead of India. China spans the equivalent of five time zones and ...
and
India
India, officially the Republic of India (Hindi: ), is a country in South Asia. It is the seventh-largest country by area, the second-most populous country, and the most populous democracy in the world. Bounded by the Indian Ocean on the so ...
. About 20 percent of Russia’s oil exports went to China, Russia’s largest single buyer as of November 2021. That year, China purchased an average of 1.6 million barrels of Russian crude oil per day. Five percent of the total oil imports of the OECD Asia Oceania region came from Russia (440 kb/d). In June 2022 Russia became China's largest supplier of oil with Russia supplying over half of China's oil imports. Russia has also historically been a significant exporter of crude to former Soviet and Eastern bloc countries, including Ukraine, Belarus, Romania and Bulgaria.
As many Western nations imposed sanctions on Russian energy firms,
Saudi Arabia
Saudi Arabia, officially the Kingdom of Saudi Arabia (KSA), is a country in Western Asia. It covers the bulk of the Arabian Peninsula, and has a land area of about , making it the fifth-largest country in Asia, the second-largest in the A ...
's
Kingdom Holding
The Kingdom Holding Company (KHC) ( ar, شركة المملكة القابضة) is a Saudi conglomerate holding company, based in Riyadh. The KHC is a publicly listed company on the Tadawul (Saudi stock exchange). The KHC consists of a select ...
secretly invested more than $500 million in three major Russian energy companies between February and March 2022. In February, the investment firm invested in global depository receipts of
Gazprom
PJSC Gazprom ( rus, Газпром, , ɡɐzˈprom) is a Russian majority state-owned multinational energy corporation headquartered in the Lakhta Center in Saint Petersburg. As of 2019, with sales over $120 billion, it was ranked as the larges ...
and
Rosneft
PJSC Rosneft Oil Company ( stylized as ROSNEFT) is a Russian Vertical integration, integrated energy company headquartered in Moscow. Rosneft specializes in the exploration, Extraction of petroleum, extraction, production, refining, Petroleum t ...
worth $365 million and $52 million respectively. Then, between February and March, the firm invested $109 million in
Lukoil
The PJSC Lukoil Oil Company ( stylized as LUKOIL or ЛУКОЙЛ in Cyrillic script) is a Russian multinational energy corporation headquartered in Moscow, specializing in the business of extraction, production, transport, and sale of petrol ...
's US depository receipts. Kingdom Holding is controlled by billionaire Prince
Alwaleed Bin Talal and is 16.9% owned by Saudi Arabia's sovereign wealth fund chaired by crown prince
Mohammed Bin Salman
Mohammed bin Salman Al Saud ( ar, محمد بن سلمان آل سعود, translit=Muḥammad bin Salmān Āl Su‘ūd; born 31 August 1985), colloquially known by his initials MBS or MbS, is Crown Prince and Prime Minister of Saudi Arabia. H ...
.
Electricity
The 2014 annexation of Crimea started the process of
Ukrenergo
Ukrenergo ( uk, ПрАТ «Національна енергетична компанія "Укренерго"», literally 'National Power Company "Ukrenergo"') is an electricity transmission system operator in Ukraine and the sole operator of ...
disconnecting the national power grid from the Russian-controlled
IPS/UPS
The IPS/UPS is a wide area synchronous transmission grid of some CIS countries, with a common mode of operation and centralized supervisory control. It has an installed generation capacity of 300 gigawatts, and produces 1,200 terawatt-ho ...
grid (a legacy of the Soviet Union) and joining the
(ENTSO-E). The military buildup and invasion in 2022 put the process on an emergency timetable. Ukraine and Moldova disconnected from the Russian grid on 28 February, and connected to the
synchronous grid of Continental Europe
The synchronous grid of Continental Europe (also known as Continental Synchronous Area; formerly known as the UCTE grid) is the largest synchronous electrical grid (by connected power) in the world. It is interconnected as a single phase-locked ...
on 16 March.
Russian attacks destroyed some power generation stations and distribution substations, and advances resulted in the capture of others.
The
Zaporizhzhia Nuclear Power Plant
The Zaporizhzhia Nuclear Power Station ( uk, Запорізька атомна електростанція, translit=Zaporiz'ka atomna elektrostantsiya, russian: Запорожская атомная электростанция, Zaporozhskaya ...
(along with the
Zaporizhzhia thermal power station
Zaporizhzhia thermal power station is a large non-nuclear thermal power plant ( DRES) in the purpose-built city of Enerhodar in Ukraine that was built by the Soviet Union between 1971 and 1977. It is the most powerful thermal power station in Ukra ...
) was captured on March 4, and Russia claimed it was being operated by
Rosatom
Rosatom, ( rus, Росатом, p=rɐsˈatəm}) also known as Rosatom State Nuclear Energy Corporation, the State Atomic Energy Corporation Rosatom or Rosatom State Corporation, is a Russian state corporation headquartered in Moscow that speciali ...
.
About a million people lost power due to fighting around
Mariupol
Mariupol (, ; uk, Маріу́поль ; russian: Мариу́поль) is a city in Donetsk Oblast, Ukraine. It is situated on the northern coast (Pryazovia) of the Sea of Azov, at the mouth of the Kalmius River. Prior to the 2022 Russian i ...
,
Kyiv
Kyiv, also spelled Kiev, is the capital and most populous city of Ukraine. It is in north-central Ukraine along the Dnieper, Dnieper River. As of 1 January 2021, its population was 2,962,180, making Kyiv the List of European cities by populat ...
,
and
Chernobyl
Chernobyl ( , ; russian: Чернобыль, ) or Chornobyl ( uk, Чорнобиль, ) is a partially abandoned city in the Chernobyl Exclusion Zone, situated in the Vyshhorod Raion of northern Kyiv Oblast, Ukraine. Chernobyl is about no ...
.
International organizations and corporations
Kristalina Georgieva
Kristalina Ivanova Georgieva-Kinova ( bg, Кристалина Иванова Георгиева-Кинова; ; born 13 August 1953) is a Bulgarian economist serving as managing director of the International Monetary Fund since 2019. She was t ...
, the managing director of the
International Monetary Fund
The International Monetary Fund (IMF) is a major financial agency of the United Nations, and an international financial institution, headquartered in Washington, D.C., consisting of 190 countries. Its stated mission is "working to foster globa ...
(IMF) warned that the conflict poses a substantial economic risk for the region and internationally, and added that the IMF could help other countries impacted by the conflict, complementary to a $2.2 billion loan package being prepared to assist Ukraine.
David Malpass
David Robert Malpass (born March 8, 1956) is an American economic analyst and former government official serving as President of the World Bank Group since 2019. Malpass previously served as Under Secretary of the Treasury for International Affa ...
, the
president of the World Bank Group
The president of the World Bank Group is the head of World Bank Group. The president is responsible for chairing the meetings of the boards of directors and for overall management of the World Bank Group. Traditionally, the World Bank Group presid ...
, said that the conflict would have far-reaching economic and social effects and reported that the bank was preparing options for significant economic and fiscal support to Ukrainians and the region.
Corporate boycotts and removals of service
Many international retail and wholesale companies announced a suspension or end to their operations in Russia and in many cases also Belarus.
Companies boycotting Russia and Belarus include:
* Shipping:
UPS
UPS or ups may refer to:
Companies and organizations
* United Parcel Service, an American shipping company
** The UPS Store, UPS subsidiary
** UPS Airlines, UPS subsidiary
* Underground Press Syndicate, later ''Alternative Press Syndicate'' or ...
,
FedEx
FedEx Corporation, formerly Federal Express Corporation and later FDX Corporation, is an American multinational conglomerate holding company focused on transportation, e-commerce and business services based in Memphis, Tennessee. The name "Fe ...
,
La Poste S.A., and
DHL announced that they would halt shipments to Russia and Ukraine.
Maersk
(), also known simply as Maersk (), is a Danish shipping company, active in ocean and inland freight transportation and associated services, such as supply chain management and port operation. Maersk was the largest container shipping line a ...
,
MSC and
CMA CGM
CMA CGM S.A. is a French container transportation and shipping company. It is the world’s 3rd largest container shipping company, using 257 shipping routes between 420 ports in 160 countries. Its headquarters are in Marseille, France The name ...
announced that any new container shipping to and from Russia would be suspended.
* Entertainment:
Disney
The Walt Disney Company, commonly known as Disney (), is an American multinational mass media and entertainment conglomerate headquartered at the Walt Disney Studios complex in Burbank, California. Disney was originally founded on October ...
,
Netflix
Netflix, Inc. is an American subscription video on-demand over-the-top streaming service and production company based in Los Gatos, California. Founded in 1997 by Reed Hastings and Marc Randolph in Scotts Valley, California, it offers a fil ...
,
Paramount
Paramount (from the word ''paramount'' meaning "above all others") may refer to:
Entertainment and music companies
* Paramount Global, also known simply as Paramount, an American mass media company formerly known as ViacomCBS. The following busin ...
and
Universal
Universal is the adjective for universe.
Universal may also refer to:
Companies
* NBCUniversal, a media and entertainment company
** Universal Animation Studios, an American Animation studio, and a subsidiary of NBCUniversal
** Universal TV, a ...
,
Sony Pictures Entertainment
Sony Pictures Entertainment Inc. (commonly known as Sony Pictures or SPE, and formerly known as Columbia Pictures Entertainment, Inc.) is an American diversified multinational mass media and entertainment studio conglomerate that produces, ac ...
,
Warner Media
Warner Media, LLC ( traded as WarnerMedia) was an American multinational mass media and entertainment conglomerate. It was headquartered at the 30 Hudson Yards complex in New York City, United States.
It was originally established in 1972 by ...
/
Warner Bros.
Warner Bros. Entertainment Inc. (commonly known as Warner Bros. or abbreviated as WB) is an American film and entertainment studio headquartered at the Warner Bros. Studios complex in Burbank, California, and a subsidiary of Warner Bros. D ...
TikTok
TikTok, known in China as Douyin (), is a short-form video hosting service owned by the Chinese company ByteDance. It hosts user-submitted videos, which can range in duration from 15 seconds to 10 minutes.
TikTok is an international version ...
restricted access to Russian users and access to Russian content.
* Food and beverage:
Yum Brands (
KFC
KFC (Kentucky Fried Chicken) is an American fast food restaurant chain headquartered in Louisville, Kentucky, that specializes in fried chicken. It is the world's second-largest restaurant chain (as measured by sales) after McDonald's, with 2 ...
,
Pizza Hut
Pizza Hut is an American multinational restaurant chain and international franchise founded in 1958 in Wichita, Kansas by Dan and Frank Carney. They serve their signature pan pizza and other dishes including pasta, breadsticks and dessert at d ...
)
McDonald's
McDonald's Corporation is an American Multinational corporation, multinational fast food chain store, chain, founded in 1940 as a restaurant operated by Richard and Maurice McDonald, in San Bernardino, California, United States. They rechri ...
,
Starbucks
Starbucks Corporation is an American multinational chain of coffeehouses and roastery reserves headquartered in Seattle, Washington. It is the world's largest coffeehouse chain.
As of November 2021, the company had 33,833 stores in 80 c ...
,
Coca-Cola
Coca-Cola, or Coke, is a carbonated soft drink manufactured by the Coca-Cola Company. Originally marketed as a temperance drink and intended as a patent medicine, it was invented in the late 19th century by John Stith Pemberton in Atlanta ...
,
PepsiCo
PepsiCo, Inc. is an American multinational food, snack, and beverage corporation headquartered in Harrison, New York, in the hamlet of Purchase. PepsiCo's business encompasses all aspects of the food and beverage market. It oversees the manuf ...
(except milk and other dairy offerings, baby formula and baby food),
Heineken N.V. (except for its Russian brands),
Carlsberg (except for its Russian brands),
Nestlé
Nestlé S.A. (; ; ) is a Switzerland, Swiss multinational food and drink processing conglomerate corporation headquartered in Vevey, Vaud, Switzerland. It is the largest publicly held food company in the world, measured by revenue and other me ...
, and others.
* Technology:
Apple
An apple is an edible fruit produced by an apple tree (''Malus domestica''). Apple fruit tree, trees are agriculture, cultivated worldwide and are the most widely grown species in the genus ''Malus''. The tree originated in Central Asia, wh ...
,
Adobe
Adobe ( ; ) is a building material made from earth and organic materials. is Spanish for ''mudbrick''. In some English-speaking regions of Spanish heritage, such as the Southwestern United States, the term is used to refer to any kind of e ...
,
Cisco
Cisco Systems, Inc., commonly known as Cisco, is an American-based multinational digital communications technology conglomerate corporation headquartered in San Jose, California. Cisco develops, manufactures, and sells networking hardware, ...
,
Dell
Dell is an American based technology company. It develops, sells, repairs, and supports computers and related products and services. Dell is owned by its parent company, Dell Technologies.
Dell sells personal computers (PCs), servers, data ...
,
Oracle
An oracle is a person or agency considered to provide wise and insightful counsel or prophetic predictions, most notably including precognition of the future, inspired by deities. As such, it is a form of divination.
Description
The word '' ...
,
Microsoft
Microsoft Corporation is an American multinational technology corporation producing computer software, consumer electronics, personal computers, and related services headquartered at the Microsoft Redmond campus located in Redmond, Washing ...
,
Panasonic
formerly between 1935 and 2008 and the first incarnation of between 2008 and 2022, is a major Japanese multinational corporation, multinational Conglomerate (company), conglomerate corporation, headquartered in Kadoma, Osaka, Kadoma, Osaka P ...
,
Samsung
The Samsung Group (or simply Samsung) ( ko, 삼성 ) is a South Korean multinational manufacturing conglomerate headquartered in Samsung Town, Seoul, South Korea. It comprises numerous affiliated businesses, most of them united under the ...
,
and many more.
* Automotive: Car manufacturers
Ford
Ford commonly refers to:
* Ford Motor Company, an automobile manufacturer founded by Henry Ford
* Ford (crossing), a shallow crossing on a river
Ford may also refer to:
Ford Motor Company
* Henry Ford, founder of the Ford Motor Company
* Ford F ...
,
General Motors
The General Motors Company (GM) is an American Multinational corporation, multinational Automotive industry, automotive manufacturing company headquartered in Detroit, Michigan, United States. It is the largest automaker in the United States and ...
,
Jaguar
The jaguar (''Panthera onca'') is a large cat species and the only living member of the genus '' Panthera'' native to the Americas. With a body length of up to and a weight of up to , it is the largest cat species in the Americas and the th ...
and
Volvo
The Volvo Group ( sv, Volvokoncernen; legally Aktiebolaget Volvo, shortened to AB Volvo, stylized as VOLVO) is a Swedish multinational manufacturing corporation headquartered in Gothenburg. While its core activity is the production, distributio ...
suspended all sales and operations in Russia.
Honda
is a Japanese public multinational conglomerate manufacturer of automobiles, motorcycles, and power equipment, headquartered in Minato, Tokyo, Japan.
Honda has been the world's largest motorcycle manufacturer since 1959, reaching a product ...
suspended all exports to Russia and
Toyota
is a Japanese multinational automotive manufacturer headquartered in Toyota City, Aichi, Japan. It was founded by Kiichiro Toyoda and incorporated on . Toyota is one of the largest automobile manufacturers in the world, producing about 10 ...
announced it halted production at its plant in
Saint Petersburg
Saint Petersburg ( rus, links=no, Санкт-Петербург, a=Ru-Sankt Peterburg Leningrad Petrograd Piter.ogg, r=Sankt-Peterburg, p=ˈsankt pʲɪtʲɪrˈburk), formerly known as Petrograd (1914–1924) and later Leningrad (1924–1991), i ...
and ceased all shipments to Russia.
Mazda
, commonly referred to as simply Mazda, is a Japanese multinational automotive manufacturer headquartered in Fuchū, Hiroshima, Japan.
In 2015, Mazda produced 1.5 million vehicles for global sales, the majority of which (nearly one m ...
suspended shipments of parts to Russia.
Volkswagen
Volkswagen (),English: , . abbreviated as VW (), is a German Automotive industry, motor vehicle manufacturer headquartered in Wolfsburg, Lower Saxony, Germany. Founded in 1937 by the German Labour Front under the Nazi Party and revived into a ...
suspended production in and stopped exports to Russia.
Nissan
, trade name, trading as Nissan Motor Corporation and often shortened to Nissan, is a Japanese multinational corporation, multinational Automotive industry, automobile manufacturer headquartered in Nishi-ku, Yokohama, Japan. The company sells ...
also halted manufacturing in Russia and vehicle exports.
Stellantis
Stellantis N.V. is a multinational automotive manufacturing corporation formed in 2021 on the basis of a 50–50 cross-border merger between the Italian-American conglomerate Fiat Chrysler Automobiles (FCA) and the French PSA Group. The comp ...
, the maker of
Jeep
Jeep is an American automobile marque, now owned by multi-national corporation Stellantis. Jeep has been part of Chrysler since 1987, when Chrysler acquired the Jeep brand, along with remaining assets, from its previous owner American Moto ...
,
Fiat
Fiat Automobiles S.p.A. (, , ; originally FIAT, it, Fabbrica Italiana Automobili di Torino, lit=Italian Automobiles Factory of Turin) is an Italian automobile manufacturer, formerly part of Fiat Chrysler Automobiles, and since 2021 a subsidiary ...
,
Citroen,
Peugeot
Peugeot (, , ) is a French brand of automobiles owned by Stellantis.
The family business that preceded the current Peugeot companies was founded in 1810, with a steel foundry that soon started making hand tools and kitchen equipment, and the ...
and
Opel
Opel Automobile GmbH (), usually shortened to Opel, is a German automobile manufacturer which has been a subsidiary of Stellantis since 16 January 2021. It was owned by the American automaker General Motors from 1929 until 2017 and the PSA Grou ...
vehicles, has suspended exports of cars from Russia and imports of vehicles into the country.
Hyundai Hyundai is a South Korean industrial conglomerate ("chaebol"), which was restructured into the following groups:
* Hyundai Group, parts of the former conglomerate which have not been divested
** Hyundai Mobis, Korean car parts company
** Hyundai ...
announced suspension of production in Russia.
Stock markets, banking sector, and the impact on the ruble
In
Russia
Russia (, , ), or the Russian Federation, is a List of transcontinental countries, transcontinental country spanning Eastern Europe and North Asia, Northern Asia. It is the List of countries and dependencies by area, largest country in the ...
, the first round of economic sanctions in response to
Russia's 2022 invasion of Ukraine had an immediate effect. The Russian stock market crashed, falling 39%, as measured by the
RTS Index
The RTS Index (RTSI; ) is a free-float capitalization-weighted index of 50 Russian stocks traded on the Moscow Exchange, calculated in US dollars. The index was introduced on September 1, 1995, with the formation of the Russian Trading System (RT ...
, on 24 February, the first day of the invasion, recovering over 26% in the following day; however, on 28 February, a Monday, the Moscow stock exchange closed for the day because of the "developing situation". The Moscow stock exchange remained closed on Tuesday and Wednesday as well, marking the longest stock market closure since
October 1998. It further remained closed until 21 March 2022, marking almost a full month of closure.
The
ruble
The ruble (American English) or rouble (Commonwealth English) (; rus, рубль, p=rublʲ) is the currency unit of Belarus and Russia. Historically, it was the currency of the Russian Empire and of the Soviet Union.
, currencies named ''rub ...
fell to record lows as Russians rushed to exchange money. The
Moscow
Moscow ( , US chiefly ; rus, links=no, Москва, r=Moskva, p=mɐskˈva, a=Москва.ogg) is the capital and largest city of Russia. The city stands on the Moskva River in Central Russia, with a population estimated at 13.0 million ...
and
St Petersburg Stock Exchanges were suspended. The
Central Bank of Russia
The Central Bank of the Russian Federation (CBR; ), doing business as the Bank of Russia (russian: Банк России}), is the central bank of the Russian Federation. The bank was established on July 13, 1990. The predecessor of the bank can ...
announced its first
market intervention
Market interventions are measures that modify or interfere with the market, usually done by governments but also by philanthropic and political-action groups.
Examples of market interventions
Market interventions include:
*Bailouts pay (usually ...
s since the
2014 annexation of Crimea to stabilize the market. It also raised interest rates to 20% and banned foreigners from selling local
securities
A security is a tradable financial asset. The term commonly refers to any form of financial instrument, but its legal definition varies by jurisdiction. In some countries and languages people commonly use the term "security" to refer to any for ...
. The sanctions put Russia's
sovereign wealth fund
A sovereign wealth fund (SWF), sovereign investment fund, or social wealth fund is a state-owned investment fund that invests in real and financial assets such as stocks, bonds, real estate, precious metals, or in alternative investments such ...
at risk of disappearing. Long lines and empty
ATMs have been reported in Russian cities.
A second round of sanctions involved various Russian banks being removed from
SWIFT
Swift or SWIFT most commonly refers to:
* SWIFT, an international organization facilitating transactions between banks
** SWIFT code
* Swift (programming language)
* Swift (bird), a family of birds
It may also refer to:
Organizations
* SWIFT, ...
, and direct sanctions on the
Russian Central Bank
The Central Bank of the Russian Federation (CBR; ), doing business as the Bank of Russia (russian: Банк России}), is the central bank of the Russian Federation. The bank was established on July 13, 1990. The predecessor of the bank can ...
. The value of the
ruble
The ruble (American English) or rouble (Commonwealth English) (; rus, рубль, p=rublʲ) is the currency unit of Belarus and Russia. Historically, it was the currency of the Russian Empire and of the Soviet Union.
, currencies named ''rub ...
fell 30% against the
U.S. dollar
The United States dollar ( symbol: $; code: USD; also abbreviated US$ or U.S. Dollar, to distinguish it from other dollar-denominated currencies; referred to as the dollar, U.S. dollar, American dollar, or colloquially buck) is the officia ...
, to as low as ₽119/$1 as of 28 February. The
Russian central bank
The Central Bank of the Russian Federation (CBR; ), doing business as the Bank of Russia (russian: Банк России}), is the central bank of the Russian Federation. The bank was established on July 13, 1990. The predecessor of the bank can ...
raised interest rates to 20% as a result. In an attempt to balance the sinking ruble, it temporarily shut down the
Moscow Stock Exchange
The Moscow Exchange (MOEX; rus, Московская биржа, r=Moskovskaya birzha, p=mɐˈskofskəjə ˈbʲirʐə, a=) is the largest exchange in Russia, operating trading markets in equities, bonds, derivatives, the foreign exchange market ...
, mandated that all Russian companies sell 80% of foreign exchange reserves, and prohibited foreigners from liquidating assets in Russia. On 7 March, the ruble was reported to be as low as ₽142.46/$1.
Also on 28 February,
Mastercard Inc. blocked multiple Russian financial institutions from its payment network. On 1 March,
VISA Inc.
Visa Inc. (; stylized as ''VISA'') is an American multinational financial services corporation headquartered in San Francisco, California. It facilitates electronic funds transfers throughout the world, most commonly through Visa-branded cred ...
announced that it had blocked those on the sanction list and that they were "prepared to comply with additional sanctions that may be implemented".
Binance
Binance is a cryptocurrency exchange which is the largest exchange in the world in terms of daily trading volume of cryptocurrencies. It was founded in 2017 and is registered in the Cayman Islands.
Binance was founded by Changpeng Zhao, a d ...
, the world's largest
cryptocurrency exchange
A cryptocurrency exchange, or a digital currency exchange (DCE), is a business that allows customers to trade cryptocurrencies or digital currencies for other assets, such as conventional fiat money or other digital currencies. Exchanges may acc ...
, announced that it would block Russian individuals who have been sanctioned but would not unilaterally freeze all Russian users accounts.
Coinbase
Coinbase Global, Inc., branded Coinbase, is an American publicly traded company that operates a cryptocurrency exchange platform. Coinbase is a distributed company; all employees operate via remote work and the company lacks a physical headq ...
, a cryptocurrency exchange platform, blocked 25,000
cryptocurrency wallet
A cryptocurrency wallet is a device, physical medium, program or a service which stores the public and/or private keys for cryptocurrency transactions. In addition to this basic function of storing the keys, a cryptocurrency wallet more often al ...
addresses related to Russia, believing them to have engaged in illicit activity. However, Coinbase also said that it would "not institute a blanket ban on all Coinbase transactions involving Russian addresses".
On 2 March, Russian listed securities trading on the London market fell sharply before the London Stock Exchange suspended trade of 27 Russian securities. "The FTSE Russell index business has removed Russian listings from its indices, the London Stock Exchange has suspended trading in 27 Russian listed securities" stated London Stock Exchange CEO
David Schwimmer
David Lawrence Schwimmer (born November 2, 1966) is an American actor, director and producer. He gained worldwide recognition for portraying Ross Geller in the sitcom '' Friends'', for which he received a Screen Actors Guild Award and a Prime ...
.
Of the most severe losses,
Sberbank
PJSC Sberbank (russian: Сбербанк, initially a contraction of russian: сберегательный банк, translit=sberegatelnyy bank, lit=savings bank, link=no) is a Russian majority state-owned banking and financial services compan ...
was down 99.72% year-to-date to trade for around a single penny,
Lukoil
The PJSC Lukoil Oil Company ( stylized as LUKOIL or ЛУКОЙЛ in Cyrillic script) is a Russian multinational energy corporation headquartered in Moscow, specializing in the business of extraction, production, transport, and sale of petrol ...
was down 99.2%,
Polyus was down 95.58%,
Gazprom
PJSC Gazprom ( rus, Газпром, , ɡɐzˈprom) is a Russian majority state-owned multinational energy corporation headquartered in the Lakhta Center in Saint Petersburg. As of 2019, with sales over $120 billion, it was ranked as the larges ...
was down 93.71%, and
Rosneft
PJSC Rosneft Oil Company ( stylized as ROSNEFT) is a Russian Vertical integration, integrated energy company headquartered in Moscow. Rosneft specializes in the exploration, Extraction of petroleum, extraction, production, refining, Petroleum t ...
was down 92.52%.
During the month of March, the ruble gradually recovered back to its pre-war value of ~80 Rubles per dollar, partially due to increased gas and oil demand from Western companies, as they feared a potential ban on Russian resources, as well as various economic measures designed to prop up the currency.
Other commodities
Nickel
Nickel is a chemical element with symbol Ni and atomic number 28. It is a silvery-white lustrous metal with a slight golden tinge. Nickel is a hard and ductile transition metal. Pure nickel is chemically reactive but large pieces are slow to ...
prices doubled after the invasion, due to fears that sanctions on Russia could cut off exports from
Nornickel
Norilsk Nickel (russian: ГМК «Норильский никель»), or Nornickel, is a Russian nickel and palladium mining and smelting company. Its largest operations are located in the Norilsk–Talnakh area near the Yenisei River in the no ...
, the world's largest supplier.
Foreign investment
The Russian invasion of Ukraine continually exacerbated the consumerism market within the country, in which several foreign companies began to suspend their function in Russia. According to one study from Yale University, merely 350 foreign investment companies have successfully fled the region, including luxury and retail sectors such as Chanel and Zara. McDonalds is one of the significant companies that ceased their 850 locations and united with Starbucks, Ikea and Heineken to thwart their operation during the midst of Western sanctions.
Nevertheless, suspending processes from the sector believe to be a temporary move, and the company remains to disburse their workers. Thus, instituting a proliferation of concern among Russian civilians considering the restaurant was one of the first fast-food chains to operate in the former Soviet Union and drastically merge to Russian everyday activity.
One interviewee expressed her concern regarding the closure of diverse sectors: "When we stood in line all those years ago, we understood the country had a real future."
Moreover, it discovered that 150 companies, including BP, Exxon, and Shell, had halted their engagement in the Russian market. Asset-light companies perhaps encounter less complicated occurrences to withdraw their operation than other sectors with a sizeable reserve of workers.
Disney continually participated in the protest against the Russian aggression on Ukraine by pausing its theatrical release; moreover, it was the first entertainment to boycott the country.
Warner Bros likewise announced it would pause its releases of films in the country, including
The Batman
Batman is a fictional superhero appearing in comic books published by DC Comics.
Batman or The Batman may also refer to:
Art, entertainment, and media
Characters
* Batman (Terry McGinnis)
* Batman (Thomas Wayne)
* Batman (Earth-Two)
* Batma ...
.
Adidas also suspended its contract with the Russian football league after
FIFA
FIFA (; stands for ''Fédération Internationale de Football Association'' ( French), meaning International Association Football Federation ) is the international governing body of association football, beach football and futsal. It was found ...
decided to suspend Russia from international football competitions, including the
upcoming men's 2022 world cup.
Luxury fashion giant
LVMH
LVMH Moët Hennessy Louis Vuitton (), commonly known as LVMH, is a French holding multinational corporation and conglomerate specializing in luxury goods, headquartered in Paris. The company was formed in 1987 through the merger of fashion house ...
, an enterprise that possesses ownership in several high-end fashion brands, including
Louis Vuitton
Louis Vuitton Malletier, commonly known as Louis Vuitton (, ), is a French high-end luxury fashion house and company founded in 1854 by Louis Vuitton. The label's LV monogram appears on most of its products, ranging from luxury bags and leather ...
,
Christian Dior
Christian Ernest Dior (; 21 January 1905 – 24 October 1957) was a French fashion designer, best known as the founder of one of the world's top fashion houses, Christian Dior SE, which is now owned by parent company LVMH. His fashion houses a ...
,
Fendi
Fendi () is an Italian high-end luxury fashion house producing fur, ready-to-wear, leather goods, shoes, fragrances, eyewear, timepieces and accessories. Founded in Rome in 1925, Fendi is known for its fur, fur accessories, and leather goods.
...
, and
Givenchy
Givenchy (, ) is a French luxury fashion and perfume house. It hosts the brand of haute couture and ready-to-wear clothing, accessories, perfumes and cosmetics of Parfums Givenchy. The house of Givenchy was founded in 1952 by designer Hubert de ...
, announced it would temporarily shut down its location in Russia
Export restrictions
The Biden administration announced the latest round of export restrictions on Russia and Belarus, adding 120 Russian and Belarusian entities to the list of sanctioned entities, most of which have connections to the military.
These restrictions are designed to weaken Russian and Belarusian defense, aviation, naval, and other strategic sectors in response to Russia's invasion of Ukraine.
Secretary of Commerce
Gina Raimondo
Gina Marie Raimondo (; born May 17, 1971) is an American politician, lawyer, and venture capitalist who has served as the 40th United States Secretary of Commerce since 2021. A member of the Democratic Party, she previously served as the 75th go ...
said in a statement, "these parties are being effectively cut off from the inputs necessary to sustain Putin's war".
Structural macroeconomic and geopolitical changes
Economic recession
The World Bank predicted that the Ukrainian economy will contract by 45 percent in 2022 and the Russian economy by 11.2 percent due to the Russian invasion of Ukraine.
Other
A study suggests that structural humanitarian, economic, and financial impacts of the war will include a) the EU getting "more serious about defence" b) that the green transition accelerates c) unwinding of broader Eurasian economic integration d) EU accession prospects for countries in Southeast Europe may improve.
Further macroeconomic changes include major calls for novel excess profit taxes such as on energy companies or on war-caused excess profits. Proponents include UN Secretary General
Antonio Guterres
Antonio is a masculine given name of Etruscan origin deriving from the root name Antonius. It is a common name among Romance language-speaking populations as well as the Balkans and Lusophone Africa. It has been among the top 400 most popular ma ...
.
War profiteering
The major
oil and gas companies
The petroleum industry, also known as the oil industry or the oil patch, includes the global processes of exploration, extraction, refining, transportation (often by oil tankers and pipelines), and marketing of petroleum products. The largest ...
, including
Shell
Shell may refer to:
Architecture and design
* Shell (structure), a thin structure
** Concrete shell, a thin shell of concrete, usually with no interior columns or exterior buttresses
** Thin-shell structure
Science Biology
* Seashell, a hard o ...
,
Exxon Mobil,
Chevron
Chevron (often relating to V-shaped patterns) may refer to:
Science and technology
* Chevron (aerospace), sawtooth patterns on some jet engines
* Chevron (anatomy), a bone
* '' Eulithis testata'', a moth
* Chevron (geology), a fold in rock ...
,
Phillips 66
The Phillips 66 Company is an American Multinational corporation, multinational energy company headquartered in Westchase, Houston, Westchase, Houston, Houston, Texas. Its name, dating back to 1927 as a trademark of the Phillips Petroleum Compan ...
,
BP and
Sinopec
China Petroleum & Chemical Corporation (中国石油化工股份有限公司) or Sinopec (), is a Chinese oil and gas enterprise based in Beijing. It is listed in Hong Kong and also trades in Shanghai.
Sinopec Limited's parent, Sinopec ...
, and the major
weapon manufacturers, such as
Raytheon
Raytheon Technologies Corporation is an American multinational aerospace and defense conglomerate headquartered in Arlington, Virginia. It is one of the largest aerospace and defense manufacturers in the world by revenue and market capitaliza ...
,
Lockheed Martin
The Lockheed Martin Corporation is an American aerospace, arms, defense, information security, and technology corporation with worldwide interests. It was formed by the merger of Lockheed Corporation with Martin Marietta in March 1995. It ...
and
BAE Systems
BAE Systems plc (BAE) is a British multinational arms, security, and aerospace company based in London, England. It is the largest defence contractor in Europe, and ranked the seventh-largest in the world based on applicable 2021 revenues. ...
, reported sharp rises in interim revenues and profits.
The term "ABCD" refers to the four companies –
ADM,
Bunge,
Cargill
Cargill, Incorporated, is a privately held American global food corporation based in Minnetonka, Minnesota, and incorporated in Wilmington, Delaware. Founded in 1865, it is the largest privately held corporation in the United States in ter ...
and
Louis Dreyfus – that dominate world agricultural commodity trading. The ABCD commodity-trading companies have seen large profits as a result of the war in Ukraine and rising food prices.
In March 2022, ''Bloomberg'' reported that
China
China, officially the People's Republic of China (PRC), is a country in East Asia. It is the world's most populous country, with a population exceeding 1.4 billion, slightly ahead of India. China spans the equivalent of five time zones and ...
was reselling its US LNG shipments to a desperate Europe at a "hefty profit".
India
India, officially the Republic of India (Hindi: ), is a country in South Asia. It is the seventh-largest country by area, the second-most populous country, and the most populous democracy in the world. Bounded by the Indian Ocean on the so ...
was buying discounted oil from Russia.
Saudi Arabia
Saudi Arabia, officially the Kingdom of Saudi Arabia (KSA), is a country in Western Asia. It covers the bulk of the Arabian Peninsula, and has a land area of about , making it the fifth-largest country in Asia, the second-largest in the A ...
also increased imports of discounted Russian oil.
In September 2022, German Economy Minister
Robert Habeck
Robert Habeck (; born 2 September 1969) is a German politician and writer who has been serving as Vice Chancellor of Germany, Federal Ministry for Economic Affairs and Climate Action, Federal Minister for Economic Affairs and Climate Action in ...
accused the
United States
The United States of America (U.S.A. or USA), commonly known as the United States (U.S. or US) or America, is a country primarily located in North America. It consists of 50 states, a federal district, five major unincorporated territorie ...
and other "friendly" gas supplier nations that they were profiting from the Ukraine war with "astronomical prices". He called for more solidarity by the US to assist energy-pressed allies in Europe. French President
Emmanuel Macron
Emmanuel Macron (; born 21 December 1977) is a French politician who has served as President of France since 2017. ''Ex officio'', he is also one of the two Co-Princes of Andorra. Prior to his presidency, Macron served as Minister of Econ ...
accused the United States, Norway and other "friendly" natural gas supplier states of extremely high prices for their supplies, saying that Europeans are "paying four times more than the price you sell to your industry. That is not exactly the meaning of friendship."
Impact on population
Due to the deteriorating economic situation in Russia, coupled with civil and political unrest, people have fled the country. A journalist who fled to Georgia wrote on his Facebook page, "Do you think we are all tourists...We are refugees...We ran not from bullets, bombs and missiles, but from prison." With large sections of airspace closed to Russian aircraft, flights from Russia to
Tel Aviv, Israel
Tel Aviv-Yafo ( he, תֵּל־אָבִיב-יָפוֹ, translit=Tēl-ʾĀvīv-Yāfō ; ar, تَلّ أَبِيب – يَافَا, translit=Tall ʾAbīb-Yāfā, links=no), often referred to as just Tel Aviv, is the most populous city in the G ...
;
Istanbul, Turkey
Istanbul ( , ; tr, İstanbul ), formerly known as Constantinople ( grc-gre, Κωνσταντινούπολις; la, Constantinopolis), is the List of largest cities and towns in Turkey, largest city in Turkey, serving as the country's economic, ...
;
Yerevan, Armenia
Yerevan ( , , hy, Երևան , sometimes spelled Erevan) is the capital and largest city of Armenia and one of the world's List of oldest continuously inhabited cities, oldest continuously inhabited cities. Situated along the Hrazdan River, Y ...
;
Baku, Azerbaijan
Baku (, ; az, Bakı ) is the capital and largest city of Azerbaijan, as well as the largest city on the Caspian Sea and of the Caucasus region. Baku is located below sea level, which makes it the lowest lying national capital in the world an ...
; and
Tbilisi, Georgia
Tbilisi ( ; ka, თბილისი ), in some languages still known by its pre-1936 name Tiflis ( ), is the capital and the largest city of Georgia, lying on the banks of the Kura River with a population of approximately 1.5 million peo ...
were sold out for many days, as well as buses into Baltic states. One
Latvia
Latvia ( or ; lv, Latvija ; ltg, Latveja; liv, Leţmō), officially the Republic of Latvia ( lv, Latvijas Republika, links=no, ltg, Latvejas Republika, links=no, liv, Leţmō Vabāmō, links=no), is a country in the Baltic region of ...
-based Russian tech worker, seeing high demand to leave the country, chartered a flight and filled the approximately 160 seats within 24 hours. The wave of emigration has caused many officials and analysts to warn of a possible significant long-term drag on the economy, especially if the emigration is permanent.
Those staying in Russia face surging inflation and
unemployment
Unemployment, according to the OECD (Organisation for Economic Co-operation and Development), is people above a specified age (usually 15) not being in paid employment or self-employment but currently available for Work (human activity), w ...
, expensive credit,
capital control
Capital controls are residency-based measures such as transaction taxes, other limits, or outright prohibitions that a nation's government can use to regulate flows from capital markets into and out of the country's capital account. These measure ...
s, restricted travel, and shortages of goods. Analysts have identified similarities with conditions in the decade following the
collapse of the Soviet Union
The dissolution of the Soviet Union, also negatively connoted as rus, Разва́л Сове́тского Сою́за, r=Razvál Sovétskogo Soyúza, ''Ruining of the Soviet Union''. was the process of internal disintegration within the Sov ...
at the end of the
Cold War
The Cold War is a term commonly used to refer to a period of geopolitical tension between the United States and the Soviet Union and their respective allies, the Western Bloc and the Eastern Bloc. The term '' cold war'' is used because the ...
. Russia's
Kaliningrad
Kaliningrad ( ; rus, Калининград, p=kəlʲɪnʲɪnˈɡrat, links=y), until 1946 known as Königsberg (; rus, Кёнигсберг, Kyonigsberg, ˈkʲɵnʲɪɡzbɛrk; rus, Короле́вец, Korolevets), is the largest city and ...
exclave
An enclave is a territory (or a small territory apart of a larger one) that is entirely surrounded by the territory of one other state or entity. Enclaves may also exist within territorial waters. ''Enclave'' is sometimes used improperly to deno ...
faces ever-increasing isolation. Additionally several leading foreign tech companies withdrew from Russia or suspended operations while Russian authorities also doubled down on the use of their "sovereign internet" technology to block access to numerous independent media and social media platforms. Altogether, it enabled Russia to put the entire country in digital isolation, as in China, because of the
Golden Shield Project
The Golden Shield Project (), also named National Public Security Work Informational Project, is the Chinese nationwide network-security fundamental constructional project by the e-government of the People's Republic of China. This project i ...
.
Due to the fact that Russia is the largest trading and economic partner for
post-Soviet states
The post-Soviet states, also known as the former Soviet Union (FSU), the former Soviet Republics and in Russia as the near abroad (russian: links=no, ближнее зарубежье, blizhneye zarubezhye), are the 15 sovereign states that wer ...
in
Central Asia
Central Asia, also known as Middle Asia, is a subregion, region of Asia that stretches from the Caspian Sea in the west to western China and Mongolia in the east, and from Afghanistan and Iran in the south to Russia in the north. It includes t ...
and a major destination for millions of
CIS
Cis or cis- may refer to:
Places
* Cis, Trentino, in Italy
* In Poland:
** Cis, Świętokrzyskie Voivodeship, south-central
** Cis, Warmian-Masurian Voivodeship, north
Math, science and biology
* cis (mathematics) (cis(''θ'')), a trigonome ...
's migrant workers, Central Asia has been particularly hard hit by sanctions against Russia.
Destroyed infrastructure
The conflict between Russia and Ukraine has led to the destruction of the local Ukrainian urban landscape.
Opposition to sanctions
China
China, officially the People's Republic of China (PRC), is a country in East Asia. It is the world's most populous country, with a population exceeding 1.4 billion, slightly ahead of India. China spans the equivalent of five time zones and ...
expressed opposition to sanctions against Russia. Nations and individuals that oppose sanctions against Russia state that sanctions do not generally result in a change in the policies of the sanctioned nation and that sanctions mostly hurt the civilian population who have little control over the issues pertaining to foreign policy.
India
India, officially the Republic of India (Hindi: ), is a country in South Asia. It is the seventh-largest country by area, the second-most populous country, and the most populous democracy in the world. Bounded by the Indian Ocean on the so ...
is also buying discounted oil from Russia.
Trade with India would enable Russia to bypass some of the sanctions, which has led the US to tell India there might be "consequences".
Saudi Arabia
Saudi Arabia, officially the Kingdom of Saudi Arabia (KSA), is a country in Western Asia. It covers the bulk of the Arabian Peninsula, and has a land area of about , making it the fifth-largest country in Asia, the second-largest in the A ...
also increased imports of discounted Russian oil.
Not a single country in
Africa
Africa is the world's second-largest and second-most populous continent, after Asia in both cases. At about 30.3 million km2 (11.7 million square miles) including adjacent islands, it covers 6% of Earth's total surface area ...
,
Latin America
Latin America or
* french: Amérique Latine, link=no
* ht, Amerik Latin, link=no
* pt, América Latina, link=no, name=a, sometimes referred to as LatAm is a large cultural region in the Americas where Romance languages — languages derived f ...
or the
Middle East
The Middle East ( ar, الشرق الأوسط, ISO 233: ) is a geopolitical region commonly encompassing Arabian Peninsula, Arabia (including the Arabian Peninsula and Bahrain), Anatolia, Asia Minor (Asian part of Turkey except Hatay Pro ...
has imposed sanctions on Russia.
Russian seizure of goods by nations imposing sanctions
In early March 2022, former Russian President
Dmitry Medvedev
Dmitry Anatolyevich Medvedev ( rus, links=no, Дмитрий Анатольевич Медведев, p=ˈdmʲitrʲɪj ɐnɐˈtolʲjɪvʲɪtɕ mʲɪdˈvʲedʲɪf; born 14 September 1965) is a Russian politician who has been serving as the dep ...
announced a new law which would allow Russia to nationalize assets of Western companies pulling out of the country. Concerns have been raised by analysts that potential auctions of assets of companies that have left Russia would potentially mirror the 1990s
"loans for shares" program introduced by
Boris Yeltsin
Boris Nikolayevich Yeltsin ( rus, Борис Николаевич Ельцин, p=bɐˈrʲis nʲɪkɐˈla(j)ɪvʲɪtɕ ˈjelʲtsɨn, a=Ru-Boris Nikolayevich Yeltsin.ogg; 1 February 1931 – 23 April 2007) was a Soviet and Russian politician wh ...
. This could potentially create more wealth for already favored individuals, new oligarchs, or business opportunities for Russian supporters.
On 28 March 2022, Russia reportedly seized multiple
Audemars Piguet
Audemars Piguet Holding SA () is a Swiss manufacturer of luxury watches and clocks, headquartered in Le Brassus, Switzerland. The company was founded by Jules Louis Audemars and Edward Auguste Piguet in the Vallée de Joux in 1875, acquiring ...
Swiss watches from one of its Russian stores that had been closed after the invasion. The seized items were valued to total multiple millions of dollars as each watch can cost upwards of $921,000 a piece, and were reportedly taken by
Russian FSB
The Federal Security Service of the Russian Federation (FSB) RF; rus, Федеральная служба безопасности Российской Федерации (ФСБ России), Federal'naya sluzhba bezopasnosti Rossiyskoy Feder ...
agents who claimed the watches had violated local customs rules when they had been imported. Additionally hundreds of leased foreign passenger jets, valued at about $10 billion have remained grounded in the country with requests for the jets to be returned denied.
See also
*
*
Restriction of transit with the Kaliningrad Oblast
A series of restrictions on transit through Lithuania between the Russian semi-exclave of Kaliningrad Oblast and mainland Russia were implemented during the 2022 Russian invasion of Ukraine. The restrictions extended only to sanctioned goods and b ...
*
Russian emigration following the 2022 invasion of Ukraine
Following the 2022 Russian invasion of Ukraine, more than 300,000 Russian citizens and residents are estimated to have left Russia by mid-March 2022, at least 500,000 by the end of August 2022, and an additional 400,000 by early October, for a t ...
*
2022 Ukrainian refugee crisis
*
2022 Russia–EU gas dispute
References
{{DEFAULTSORT:2022 Russian Financial Crisis
Economic history of Russia
Russian financial crisis, 2022
Stock market crashes
Debt
Political history of Russia
Russian Financial Crisis, 2022
financial crisis
A financial crisis is any of a broad variety of situations in which some financial assets suddenly lose a large part of their nominal value. In the 19th and early 20th centuries, many financial crises were associated with banking panics, and man ...
Economic
An economy is an area of the Production (economics), production, Distribution (economics), distribution and trade, as well as Consumption (economics), consumption of Goods (economics), goods and Service (economics), services. In general, it is ...