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The Russian invasion of Ukraine has triggered significant disruptions to the supply of commodities such as energy and food, which Russia and Ukraine are key exporters.
The war exacerbated existing pandemic-related stress in commodity markets that had arisen due to supply chain disruptions, weak investment in energy production, and a rapid rebound in global demand. Most commodity prices have seen sharp increases over the past year, with some reaching all-time highs, which has contributed to the global rise in inflation.
Wars, pandemics, and global recessions have repeatedly impacted commodity markets throughout history. These events can have long-term consequences; prolonged periods of very high (or low) commodity prices can cause permanent changes in the behavior of consumers and producers, often exacerbated by government policies. During the first oil price shock in 1974, prices rose five-fold in one year, while they tripled during the 1979 oil price spike, reaching a high of $151 per barrel of crude oil in real 2022 prices.
- blog.wb.or/blogs
A version of this article appears in the print on July 14, 2022, of The Himalayan Times.