Explained: Russia-Ukraine conflict and its impact on commodities

Russia has gone ahead and recognised the independence of Donetsk and Luhansk in eastern Ukraine and this is what the markets are perhaps calling ‘the invasion’. The next thing or the next step that the markets are factoring in right now is the stringent sanctions where the US has said that they will issue executive orders prohibiting new investment, trade and finance. There are also statements coming in from NATO, France, Germany, UK; the European Union will be looking at targeted sanctions as well on Russia.

How much of that would impact on investment, global trade and supplies of many of the commodities from Russia are what the street is getting jittery about.

Crude oil prices, which are trading at a seven-year high and is almost nudging that $100 per barrel mark in the international markets and Russia is the second-largest oil producer and exporter in the world. Actually, 12 percent of global exports come in from Russia and prices have gained by nearly 12 percent in this month alone, and they are up by 52 percent now from the past year itself, so strong gains continue in case of prices.