Russia’s attack on Ukraine and the Western sanctions that followed are having a massive impact on global trade as shipping companies are abandoning Russia, and the fighting is causing uncertainty over Russian and Ukrainian wheat exports.
According to AP, the US has only sanctioned a handful of Russia’s 2,000 cargo and tanker ships, but sanctions on Russian banks mean the business of importing and exporting from Russia will take a major hit. The sanctions have already caused an exodus of Western companies from doing business in Russia.
Shipping giants Maersk and the Mediterranean Shipping Company have announced they are cutting service to Russia, and the fighting has caused hundreds of ships to be diverted from the Black Sea. Both Ukraine and Russia are major wheat exporters, and the war and sanctions threaten the food supply of some countries.
Over the past week, wheat prices have shot to a record high in Europe as the EU is a major importer of Ukrainian wheat. Some countries in the Middle East are also reliant on Russian and Ukrainian wheat, including Egypt, Lebanon, and Turkey.
The UN’s World Food Program (WFP) has warned that the surge in food prices will cause aid shortages in Yemen, where the civilian population faces mass starvation due to the US-backed Saudi-led war and blockade. “We have no choice but to take food from the hungry to feed the starving and, unless we receive immediate funding, in a few weeks we risk not even being able to feed starving,” WFP chief David Beasley said.
Of course, the war and US sanctions mean skyrocketing fuel prices. Oil prices reached a 10-year high of $120 dollars per barrel on Thursday. For now, the US hasn’t banned Russian oil, but a growing chorus of hawks in Washington are calling on the Biden administration to take that step.
Russian President Vladimir Putin factored Western sanctions into his plans to attack Ukraine, so there’s no reason to think that they will stop his offensive. Instead, the sanctions will only make the crisis worse by hurting ordinary Russians and further hampering global trade.