War and Commodity Prices

How wars disrupt supplies of oil, gas, grain and fertiliser, sending prices soaring far from the fighting, with the 2022 invasion of Ukraine as a key example.

Wars do not only affect the countries where fighting happens. When a conflict disrupts the production or transport of key commodities, prices can rise around the world, affecting households thousands of kilometres away.

Oil shocks

Many past oil price shocks were linked to conflict. The 1973 Arab oil embargo, imposed during the Arab-Israeli war, sharply raised oil prices. The 1979 Iranian revolution and the 1990 Iraqi invasion of Kuwait also caused oil price spikes. Because oil is used in transport, industry and farming, these shocks raised costs throughout economies.

Ukraine, 2022

Russia’s full-scale invasion of Ukraine in February 2022 showed how a war can shake several commodity markets at once:

Energy: Russia was a major exporter of oil and the largest supplier of natural gas to Europe. As supplies were cut and sanctions imposed, European gas prices rose to record levels in 2022.
Grain: Russia and Ukraine together were major exporters of wheat, maize and sunflower oil. Ukraine’s Black Sea ports were blockaded early in the war, and world wheat prices jumped.
Fertiliser: Russia and Belarus are major fertiliser exporters. Higher fertiliser and gas prices raised farming costs worldwide.

The UN Food and Agriculture Organization’s food price index reached its highest level on record in March 2022.

The Black Sea Grain Initiative

In July 2022, the United Nations and Türkiye brokered an agreement allowing Ukraine to export grain by sea through a protected corridor. Tens of millions of tonnes of grain and other food were shipped before Russia withdrew in July 2023. The deal helped calm world food prices, showing how much global markets depended on those shipments.

Who suffers most

Rising food and energy prices hit poorer households hardest, because they spend a larger share of their income on food and fuel. Countries that import most of their food and energy, including many in Africa and the Middle East, were particularly exposed in 2022. Higher commodity prices also fed into inflation around the world.

Thinking distant wars do not affect your budget

Because commodities are traded globally, a war affecting major producers can raise prices at petrol stations and grocery shops worldwide. The 2022 energy and food price spikes reached households far from Ukraine.

Key takeaways

Wars that disrupt commodity production or transport can raise prices worldwide.
Past oil shocks in 1973, 1979 and 1990 were linked to conflict.
The 2022 invasion of Ukraine sent energy, grain and fertiliser prices soaring.
Poorer households and import-dependent countries suffer most from such shocks.