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One Year Later
One year ago today, the Armed Forces of the Russian Federation began a hostile, unprovoked invasion of the neighboring country of Ukraine. Today, the war continues to rage, with expectations for a springtime escalation looming large.
Now, considering the obvious tragedy for the individuals living in that region as well as their friends and families abroad, it’s clear this now year-long war has carried enormous macroeconomic and geopolitical changes along with it. Of course, exactly 0 people actually affected directly by the invasion give a single sh*t about those macro dynamics and other changes, but it’s worthwhile to take a look at what’s going on.
From February 24th of last year, the immediate concern for most of Europe jumped right to energy. Not necessarily the price of that energy, but if they were going to be able to keep buying from Russia as the continent had relied on for the previous decade(s).
Not long after the invasion, sanctions and the blowing up of the Nord Stream pipelines answered that question pretty clearly. With a lack of supply and expected record demand, prices absolutely mooned in the short-term, but let’s see how these commodities have performed in the year since:
- WTI Crude Oil (US): -16.9%
- Brent Crude (International): -11.6%
- Natural Gas: -49.9%
- Gasoline: -17.4%
- Heating Oil: -2.5%
Aaaaaand they were way off. An explosion in prices was easy to predict, and hindsight is 20/20, but it seems that traders and experts alike failed to consider how people would actually react to these mooning prices. Yes, a lot of that is due to the US basically draining the SPR, but these experts must’ve skipped out on their meteorology class, too, as winter across the globe this year has been far less harsh than in recent years, decreasing demand for these energy commodities.
But it wasn’t just energy, of course, that came into question. As the “breadbasket of Europe,” drastic concerns arose over wheat crop harvesting and shipment since Ukraine apparently carries the whole world on it’s back when it comes to these products.
But, other countries stepped production up, and deals were made to ensure much of the third-world didn’t literally starve without Ukrainian wheat, allowing crop-carrying ships to pass through ports and the Mediterranean without any interference from the Russian military (allegedly).
The other big question around “supply” was the supply of military equipment Ukraine had in its back pocket at the onset of the invasion. Spoiler: it wasn’t much, but boy, has that changed since then.
Plenty of countries are helping out, but the U.S. has been far-and-away the largest supplier of aid to Ukrainian front lines and bank accounts. The data changes daily, but as of the start of this month, the US had given or pledged over $100bn in aid, a total amount of about 0.37% of our GDP.
About half of that aid comes in the form of existing military arms and equipment the US just kinda had lying around, like older firearms, vehicles, and now tanks and air-defense systems. Financial aid has been overwhelming as well, allowing Ukrainian forces to procure further assistance from both humanitarian and militaristic sources.
This doesn’t even scratch the surface of highlighting the dynamism caused by the invasion. The West has arguably become more united, like the BFFs they once were again, while both the financial and militaristic standing of the Russian Federation slowly bleeds out.
Only time will tell what could go down in the future, but I just really hope I don’t have to write another version of this article this time next year.
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