New Delhi: Crude oil has come to a hike after Russia's invasion of Ukraine. On Thursday, crude prices rose to a 14-year high due to trade in the US. It reached $116.57 a barrel, its highest level since September 22, 2008. Then the Lehman Brothers have boiled down to it because of the crisis. Due to the Russia-Ukraine crisis, not only crude oil but also cooking oil, food grains and gas prices have increased drastically. Its impact is also beginning to be seen in India and inflation may go unchecked in the coming days. A week-long battle in Ukraine has shaken the hackles of the global economy. Sanctions by western countries have isolated Russia, severely affected its currency and financial assets, and prices of energy and food grains have skyrocketed. According to the World Bank, Russia is the 11th largest economy in the world with $1.5 trillion. Russia has large reserves of oil and gas. This is the reason why crude oil has increased due to the possibility of disruption of supply from Russia.
Crude oil is 20% more expensive:- Amid the ongoing tensions between Russia and Ukraine, crude oil prices have reached record highs. Crude oil prices have risen by 20 per cent since the start of the war in Ukraine. The price of natural gas in Europe has reached a record level. According to a report, it could have the greatest impact on India in Asia. India imports 80 per cent of its crude oil requirement.
The risk of all-round inflation:- The rise in crude oil prices will affect cement, airlines, paint manufacturing companies, FMCG and auto sectors. Power and fuel costs are 25 to 30 per cent of the total operating cost of cement companies. Similarly, airline companies will be affected by the costlier of aviation fuel. Crude oil is widely used in paints. Similarly, the cost of FMCG companies will increase as packaging and transport become costlier. The auto sector will also be affected due to the price of oil. That means the rise in oil prices will hit the price rise all-round.
The price of gas may double from April:- There is a huge shortage of natural gas all over the world and its impact can be seen in India in April. This could double the price of gas in the country. The prices of CNG, PNG and electricity will go up. Domestic industries are already paying higher prices for imported LNG. The reason for this is long-term contracts where the prices are linked to crude oil. But the real impact will be seen in April when the government changes the domestic prices of natural gas.
Increase in food prices:- The Russo-Ukraine war has increased the pressure on the global supply chain, which has also led to the rise in the prices of many other things. Ukraine and Russia account for 14% of the world's wheat production. These two countries account for 29 per cent of the total wheat exports worldwide. This could increase the price of wheat worldwide.
Also boil in edible oil:- Due to the Corona epidemic and now the war in Russia-Ukraine, the prices of edible oils have increased. Although it has not yet had an impact on the prices of mustard oil, experts believe that it is likely to have an impact on the prices of mustard oil in the coming time. In fact, the prices of edible oils are witnessing a steep rise in the markets across the country. Prices of refined and sunflower oil, in particular, have registered a rise of about 30 per cent within the last 15 days. 15 days ago, where the refined was Rs 140 a litre, it has now increased to Rs 165 per litre. Sunflower oil was earlier Rs 140, which has now become Rs 170. At the same time, the price of desi ghee was earlier Rs 360 per litre, which has now increased by Rs 420 and the prices of vegetable oils by Rs 20.
Electronic goods and cars will be expensive:- According to a report, the world's chip industry is heavily dependent on Russia and Ukraine for C4F6, neon and palladium. They are widely used in making semiconductors. For example, 90% of the neon used in the U.S. semiconductor industry comes from Ukraine. Russia is the largest supplier of palladium in the world. Semiconductors are used in many industries including auto and electronics.
It will be expensive:- Two-thirds of the world's ammonium nitrate is produced in Russia. Russia is the largest exporter of it in the world. Disruption of its supply will make it costly to produce crops across the world. This is likely to increase food inflation. Food inflation in the US has reached over 6 per cent. India imports large quantities of chemical fertilizers from Ukraine. Due to disruption of its supply, there may be a shortage of fertilizers in the country. Not only that, most of the fertilizer-making plants have now shifted to gas instead of coal. Gas is supplied from Ukraine.
Metals will also be expensive:- Russia has about 10 percent of the world's copper reserves. It also has six per cent reserves of aluminium and nickel. Aluminium is used in car production while nickel is required in electric car batteries. Both of these metals are at a decade's high. Russia is also the second-largest producer of platinum in the world, which is used in many industries.
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