Chennai
Russian President Vladimir Putin on Monday signed decrees to recognise Ukraine's regions of Donetsk and Luhansk People's Republics' as "independent", escalating the tension in the region and increasing fears of Moscow's invasion of Ukraine.
Western nations and Japan on Tuesday punished Russia with new sanctions and threatened to go further if Moscow launched an all-out invasion of its neighbour. The United States, the European Union, Britain, Australia, Canada and Japan announced plans to target banks and elites while Germany halted a major gas pipeline project from Russia in one of the worst security crises in Europe in decades.
In perhaps the most significant measure announced on Tuesday, Germany halted the $11 billion Nord Stream 2 pipeline owned by Russian state-owned gas giant Gazprom , a move likely to raise gas prices in Europe.
What are the impacts that India is likely to face due to the ongoing tension?
1) CRUDEOIL - The Russia-Ukraine tension and a surge in crude oil prices pose risk to the financial stability of the country and the government is closely monitoring the situation. Crude oil prices soared by nearly 4 per cent to USD 99 a barrel on Tuesday after Russia recognised two separatists states of eastern Ukraine.
Crude oil futures on Tuesday reached their highest levels since 2014. A US State Department official said sanctions that could be imposed in the near future "will not target oil and gas flows". According to experts, the price of domestic natural gas (CNG, PNG, electricity) could increase tenfold if Russia goes to war with Ukraine.
In the coming days, petrol prices in India are likely to go up by rs 8/ litre as crude prices soar
2) TRADE - India is one of the largest exporters of Ukraine in Asia-Pacific. The country's main exports include pharmaceutical products, reactors/boiler machinery, mechanical appliances, oil seeds, fruits, coffee, tea and spices among others. Now, Indian companies in relation with the European Union have come under pressure as investors fear the impact on business due to the escalating tension.
3)HIKE IN ESSENTIAL COMMODITIES' PRICES - Russia is one of the major supplier of wheat, accounting for 25 per cent of global export. Wheat prices rose in the last two days on concern about supplies from Russia and Ukraine being disrupted. Prices of nickel and aluminum, for which Russia is a major supplier, also rose.
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