top of page

Sanctions and Self-Sabotage 🛢️

Russia and Ukraine have entered the fourth month of fighting, and the global economy has been fighting inflationary pressures since. While the conflict already did result in supply chain disruptions and shortages of key commodities across the globe, sanctions by the US and EU have further worsened the inflation-situation.


Markets are now left grappling inflation, central bank policy reversal and lower growth. For the last 3 weeks now, the markets have been seeing petty gains, reversing half the downfall seen after the RBI increased rates. What’s up?



More sanctions

The EU passed their sixth phase of sanctions on Russia last week, which includes an embargo on Russian oil. Oil prices surged touching US$ 120 a barrel after.


Per the sanctions, a ban would be imposed on Russian oil that comes into the EU by sea. This accounts for 90% of EU’s oil imports from Russia.


There is an exemption on oil that is transported through pipelines, a concession made for landlocked countries because of a lack of an alternative.


Get ready for higher oil prices

With the EU ban, oil prices have already shot up. In addition to this, there is one more looming problem - China!


So far, since the conflict began, China had been under a lockdown to implement its no-tolerance policy on COVID. This had slowed down demand significantly as both cities and industrial hubs were shut away.


China is now slowly opening up, and it has also reduced rates to further boost the economy. More oil demand coming in from China, while supply problems get aggravated will only lead to a further increase in the price of oil.


Self sabotage

While the intent is to hurt the Russian economy, imposing a ban on Russian oil when the EU is heavily dependent on it, and in a scenario where demand is only increasing is causing self harm too.


The embargo results in a shooting up of oil prices, and a further spike in inflation. Consequent actions will be led by central banks in order to slow the economy down, and the effect will be seen on global financial markets.


What next?

Inflationary pressures have been driving a lot of the negative movement on the markets. We see this continuing till the time the supply impact of the conflict gets resolved, substituted sustainably, or normalised. Or, till the time enough fiscal and monetary action results in a likely lowering of inflation.

Comments


Rupeeting

Powered by Paterson Securities Group

  • Rupeeting Youtube
  • Rupeeting X
  • Whatsapp

Email: sawaal@rupeeting.com

Support: +91 97697 70046

22/A Shah Industrial Estate

Off Veera Desai Road

Andheri West

Mumbai 400053

Rupeeting Logo.png

Alphaware Advisory Services Private Limited (Brand Name - Rupeeting) makes no warranties or representations, expressed or implied, on products and services offered through the platform. It accepts no liability for any damages or losses, however, caused in connection with the use of, or on the reliance of its advisory or related services. Past performance is not indicative of future returns. Please consider your investment requirements, risk tolerance, goals, time horizon, risk and reward appetite, and the cost associated with the investment before choosing a fund, or designing a portfolio that suits your needs. Performance and returns of any investment portfolio can neither be predicted nor guaranteed. Investments in mutual funds, stocks, ETFs and any other investment products that you see Rupeeting's views being expressed on are subject to market risks. Please read all scheme related documents carefully. The content and data available in the material prepared by the company and on the website of the company, including but not limited to index value, return numbers and rationale are for information and illustration purposes only. Charts and performance numbers do not include the impact of transaction fee and other related costs. Past performance does not guarantee future returns and performances of the portfolios are subject to market risk. The information is only for consumption by the client and such material should not be redistributed. Data used for calculation of historical returns and other information is provided by exchange approved third party vendors and has neither been audited nor validated by the Company. Detailed return calculation methodology is available here. Detailed volatility calculation methodology is available here. Registration granted by SEBI, membership of BASL and certification from NISM in no way guarantee performance of the intermediary or provide any assurance of returns to investors. Alphaware Advisory Services Private Limited [SEBI RIA Registration No: INA000015747] [Validity of registration: February 08, 2021-Perpetual] [BASL ID: 1610] [Address: 22/A Shah Industrial Estate, Off Veera Desai Road, Andheri West, Mumbai 400053] [Principal Officer details: Mr. Sagar Lele, Email id: sagar.lele@rupeeting.com, Contact No. +91-9769770046] [Compliance Officer details: Mr. Sagar Lele, Email id: sagar.lele@rupeeting.com, Contact No. +91-9769770046] [Grievance Officer details: Mr. Sagar Lele, Email id: sagar.lele@rupeeting.com, Contact No. +91-9769770046] [Platform Partner: smallcase] [CIN – U74999MH2019PTC320573] [GST No: 27AARCA8847R1ZF] [SEBI regional address: SEBI Bhavan BKC, Plot No. C4-A, 'G' Block, Bandra-Kurla Complex, Bandra (East), Mumbai, Maharashtra, India, Pin Code – 400051.]

© 2025 by Rupeeting

bottom of page