Global commodity markets are currently in turmoil due to the Russian invasion of Ukraine.

The article explores the economic consequences of this crisis, highlighting the
interdependence of economies and the need for strategic responses to mitigate its impact.

The main question then is how to confront Putin’s agression without striking economies
with chaos. Sanctions are typically used as a non-military tool to influence the behavior of
the target country. Economic sanctions can include trade embargoes, restrictions on
financial services, and bans on specific imports or exports.

America suggested to ban purchases of russian oil as a form of sanction. However the kind
of decisions, that are so firm, are faught with complexity. It is essential to consider both
advantages and disadvantages when evaluating the implementation of such actions, as they
have broad implications for both domestic and international dynamics.

Withdrawal from using russian crude oil directly causes decrease in a number of its
consumers. This lowers the demand, and as a result it may restrict Russia’s revenues from
the export, affecting its ability to finance military actions.
The effect of resignment from russian crude oil on the demand (ceteris paribus) can be
observed on the graph displaying demand curves as shown below.

Figure1. The influence of changes in the numer of consumers on the demand of russian
crude oil (ceteris paribus).

When observing the demand graph that displays the impact of decrease in the amount of
consumers of russian crude oil on the demand the leftward shift can be observed. The
change in the number of consumers is considered as non-price determinant of demand. As
there is a decrease in the number of buyers the demand curve shifts rightwards from D1 to
D2. The Q0 changes into Q1. This situation is called a decrease in demand.
As it is explained above, this american plan has some point, however there are a lot of
difficulties with this idea.
The first one is that it is impossible to make the embargo worldwide because the European
Union is a great consumer of Russian crude and refined products, so if it joined it, about 5%
of global supply would be affected. Also the price for a barrel of oil would increase to a
horrendous level.
Abandoning russian resources may also lead to the retaliation. As Europe is mostly
depending on the russian gas, cutting it off may lead to the lack of energy, which disrupts
energy security of poorer or lacking the resources countries.
A reduction in the availability of oil and gas can lead to higher energy prices. Since energy
costs are integral to the production and transportation of goods and services, these price
increases can lead to higher production costs, which may be passed on to consumers in the
form of higher prices for a wide range of products visible as overall inflation.
However maybe this is a chance for the world to encourage diversification of energy sources
and reducing the subjection to Russia for enhancing global energy security. This may also
force the development of nuclear or renewable generation so as to stock up on gas to
reinforce energy self-containment.
The real problem occurs when a country cannot manage the shortage of materials and its
complex consquences affecting production, trade, and economic stability, ultimately
challenging a country's growth prospects and resource allocation.

This is why support from more economically developed countries to less affluent nations is
crucial, especially in times of global crises and instability. Strengthening the global financial
safety net is an essential component of this support. It's important to emphasize the
importance of international cooperation and coordination in these efforts. A united global
response to crises ensures more efficient and effective support for those in need.
The ongoing conflict also creates an environment of uncertainty, which can deter investors
and lead to reduced business confidence, affecting economic growth.
In conclusion, the war between Russia and Ukraine presents a complex and multifaceted set
of economic challenges. While the immediate consequences, such as energy supply
disruptions and increased production costs, are concerning, the potential for inflation looms
as a broader economic threat. The global supply chain disruptions, financial market
volatility, and impact on trade can further compound these challenges, affecting not only
the countries directly involved but the global economy at large.

Bibliography:
https://www.rand.org/blog/2023/03/consequences-of-the-war-in-ukraine-the-economic-
fallout.html
https://time.com/6156015/us-oil-ban-russia-consequences/