Skip to main content

Producer of many essential goods, Russian war 'pushing' world to recession

 By NS Venkataraman* 
While it is not clear as to what is the ultimate objective of Russia in conducting the ruthless attack on Ukraine, the ground reality is that the war has significantly disturbed the global economy and forced several countries, particularly the small countries with weak economy , into a state of severe crisis.
Indeed, the world cannot be without supply of essentials from Russia. Russia is a dominant supplier of energy (crude oil and natural gas) , wheat, fertilisers and several other products to the world. Therefore, the world is bound to get into a scenario of supply and economic crisis , if Russia were to stop the supply of essentials to the world market.
Russia holds 80,000,000,000 barrels of proven oil reserves ranking 8th in the world and accounting for about 4.8% of the world's total oil reserves of 1,650,585,140,000 barrels. Russia has proven oil reserves equivalent to 60.4 times its annual consumption. Russia is the world’s third largest oil producer behind the United States and Saudi Arabia.
Russia is the second largest crude oil exporter behind Saudi Arabia. Russian crude and condensate output is around 10.5 million barrels per day (bpd), making up around 12% of the world's total supply. 
Russia remains the second largest natural gas producer in the world, accounting for 17% of the global output. Russia has oil and gas production facilities throughout the country, but the bulk of its fields are concentrated in western and eastern Siberia.

Agricultural commodities

In the case of the agricultural commodity, Russia, which competes mainly with the European Union and Ukraine for wheat supplies to the Middle East and Africa, has been limiting its grain exports with taxes and an export quota since 2021 amid efforts to slow domestic food inflation.
Russia is an important producer of agricultural commodities in the world. Russia is a net exporter of agricultural products, and play leading supply role in the global market of foodstuffs and fertilisers, Russia is ranked amongst the top global exporter of wheat, maize, rapeseed, sunflower seeds and sunflower oil.
Russia is one of the world’s largest wheat exporters. The country’s 2022 wheat crop , which is due to arrive this summer, is expected to reach 85 million tonnes. Russia has the potential to export 39 million tonnes of wheat in 2022-23 marketing season, which starts in July. Exports from Russia are crucial for the global wheat supply and demand balance.
Russia produces 50 million tonnes of fertilizers annually accounting for 13 per cent of the world's total output including potash, phosphate, and nitrogen-containing fertilizers, all of which are major crop and soil nutrients. Russia is the world's largest exporter of fertilizers, accounting for 23% of ammonia exports, 14% of urea export, 10% of processed phosphate exports, and 21% of potash export.

Metals, oil and gas

Most Russian metals production is exported. Its market share of total global exports of nickel is estimated at around 49% – palladium: 42%, diamond: 33%, aluminum: 26%, platinum: 13%, steel: 7% and copper: 4%. Russia accounts for only 4.4% of cobalt production, but despite this seemingly small share, it makes Russia the world's second largest producer of cobalt.
Russia is Europe's biggest oil supplier. 30% of the EU's petroleum oil import and 39% of total gas import come from Russia. For Estonia, Poland, Slovakia and Finland, more than 75% of their import of petroleum oils come from Russia.
Considering the high level of dependency for energy requirements on Russia, NATO members have now realised that they have no immediate alternative other than buying oil and gas from Russia.
While some steps have been taken by NATO members to shift the source of procurement of crude oil to Middle-East or other regions to some extent, this option is not available with regard to natural gas. In such circumstances, the economic embargo on Russia by NATO members and USA are not making much impact on Russia’s economy as of now.
In April 2022, Russia supplied 45% of the EU's gas import, 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.
Significant drop in supply from Ukraine of essential agricultural commodities has resulted in food crisis in the world
Russia is insisting that NATO members should pay for crude oil and natural gas in Russian currency roubles, and several NATO members are succumbing to this pressure.
The energy war between Russia and NATO members are continuing with really no perceptible change in demand supply scenario and transaction between Russia and NATO members so far.
Meanwhile, price for crude oil nevertheless surged to around USD 110 per barrel following the expectations in the trade and speculative market that sanctions against Russia would cripple energy exports. It is currently unclear what the impact of sanctions will be on energy flows and if any supply losses will really happen.

Supplies from Ukraine

Ukraine is ranked amongst the top global exporters of wheat, maize, rapeseed, and sunflower oil. Ukraine is the most important producer of several inputs like neon to the world and the neon facility in Ukraine has now been forced to stop operations during the war.
As the supply source from Ukraine has considerably dropped now due to the war, the world has become vulnerable to shocks and volatility of supply and price of vital agricultural commodities, fertilisers etc. The significant drop in supply from Ukraine of such essential agricultural commodities has resulted in food crisis in the world.
Violating the sovereignty of a neighbouring country, Russia has crippled the Azovstal Steel Works in Ukraine for all practical purposes, which is the largest producer of metallurgical facilities in Europe producing 4 million tonnes of crude steel annually.
Real shortfall in supply is happening as Ukraine has been hit hard by Russian forces, curtailing the export of wheat, gas and several other essential agri and non agri commodities from Ukraine. For example, India has been importing about 19 million litre of sunflower oil from Ukraine, which has now stopped, causing severe supply constraint in India for sunflower oil.
Under the circumstances, the recession trend in the world and the impending food crisis can be avoided only if Russia stops attacking Ukraine.
---
*Trustee, Nandini Voice for the Deprived, Chennai

Comments

TRENDING

'Flawed' argument: Gandhi had minimal role, naval mutinies alone led to Independence

Counterview Desk Reacting to a Counterview  story , "Rewiring history? Bose, not Gandhi, was real Father of Nation: British PM Attlee 'cited'" (January 26, 2016), an avid reader has forwarded  reaction  in the form of a  link , which carries the article "Did Atlee say Gandhi had minimal role in Independence? #FactCheck", published in the site satyagrahis.in. The satyagraha.in article seeks to debunk the view, reported in the Counterview story, taken by retired army officer GD Bakshi in his book, “Bose: An Indian Samurai”, which claims that Gandhiji had a minimal role to play in India's freedom struggle, and that it was Netaji who played the crucial role. We reproduce the satyagraha.in article here. Text: Nowadays it is said by many MK Gandhi critics that Clement Atlee made a statement in which he said Gandhi has ‘minimal’ role in India's independence and gave credit to naval mutinies and with this statement, they concluded the whole freedom struggle.

A Hindu alternative to Valentine's Day? 'Shiv-Parvati was first love marriage in Universe'

By Rajiv Shah*   The other day, I was searching on Google a quote on Maha Shivratri which I wanted to send to someone, a confirmed Shiv Bhakt, quite close to me -- with an underlying message to act positively instead of being negative. On top of the search, I chanced upon an article in, imagine!, a Nashik Corporation site which offered me something very unusual. 

BSF should take full responsibility for death of 4 kids in West Bengal: Rights defender

By Kirity Roy*  One is deeply disturbed and appalled by the callous trench-digging by BSF in Chetnagachh village under Daspara Gram Panchayat, Chopra, North Dinajpur District, West Bengal that has claimed the lives of four children. Along the entire stretch of Indo-Bangladesh border of West Bengal instead of guarding the actual border delineated by the international border pillars, BSF builds fences and digs trenches well inside the Indian territory, passing through villages and encroaching on private lands, often without due clearance or consent. 

Don't agree on domestic subsidies, ensure food security at WTO meet: Farmer leaders

Counterview Desk  The Indian Coordination Committee of Farmers Movements (ICCFM), a top network of farmers’ organizations in India, in a letter to Piyush Goyal, Minister of Commerce and Industry, has asked him to “safeguard food security and sovereignty, even as ensuring peasants' rights" at the 13th Ministerial Conference of the World Trade Organization (WTO MC 13), to take place from 26 to 29 February 2024 in Abu Dhabi.

Students, lawyers, professors detained in Delhi for demonstrating in support of farmers

By Our Representative  About 25 protestors, belonging to the civil rights network, Campaign Against State Repression (CASR), a coalition of over 40 organisations, were detained at Jantar Mantar for holding a demonstration in support of the farmers' stir on Friday. Those detained included students, lawyers and professors, including Prof Nandita Narain and Prof N Sachin. 

Solar energy funding dips 9% in 2023; 2024 'kicks off' with US$1 billion investment

By Lakshmitha Raj*  Solar energy tech companies have already secured slightly over US$1 billion in funding in 2024 (till Feb 7, 2024) after total funding into Solar Energy companies in India fell 9% to US$1.55B in 2023 from US$1.7B in 2022. A total of 39 $100M+ rounds have been closed till date, with Delhi leading the city-wise funding, followed by Gurugram and Mumbai.

Sharp 61-85% fall in Tech startup funding in India's top 'business-friendly' States

By Rajiv Shah Funding in Tech startups in top business-friendly Indian states has witnessed a major fall, a data intelligence platform for private market research has said in a series of reports it has released this month. Analysing Tech startup data of Telangana, Maharashtra, Delhi NCR, Gujarat, Tamil Nadu, Karnataka and Kerala, Tracxn Technologies Ltd , the Bengaluru-based research firm, finds that except for Kerala, funding witnessed a fall of anywhere between 61% and 85%.

Buddhist shrines were 'massively destroyed' by Brahmanical rulers: Historian DN Jha

Nalanda mahavihara By Our Representative Prominent historian DN Jha, an expert in India's ancient and medieval past, in his new book , "Against the Grain: Notes on Identity, Intolerance and History", in a sharp critique of "Hindutva ideologues", who look at the ancient period of Indian history as "a golden age marked by social harmony, devoid of any religious violence", has said, "Demolition and desecration of rival religious establishments, and the appropriation of their idols, was not uncommon in India before the advent of Islam".

Social justice day amidst 'official neglect' of salt pan workers in Little Rann of Kutch

By Prerana Pamkar*  In India’s struggle for Independence, the Salt Satyagraha stands as a landmark movement and a powerful symbol of nonviolent resistance. Led by Mahatma Gandhi, countless determined citizens walked from Sabarmati Ashram to Dandi in Gujarat. However, the Gujarat which witnessed the power of the common Indian during the freedom struggle is now in the throes of another significant movement: this time it is seeking to free salt pan workers from untenable working conditions in the Little Rann of Kutch (LRK).

Maize, bajra, jute, banana cultivation banned off West Bengal border: Plea to NHRC

Counterview Desk  West Bengal-based human rights defender Kirity Roy, who is secretary, Banglar Manabadhikar Suraksha Manch, and is national convenor of the Programme Against Custodial Torture & Impunity, in a representation to the chairman, National Human Rights Commission, second within few days, has bought to light one more case of trespassing and destruction of a fertile banana plantation by BSF personnel along the Indo-Bangladesh border, stating, despite a written complaint to the police has taken "no initiative".