Will Russian Sanctions Impact Global Supply Chains?

After months of escalating tensions and troop reinforcements along the eastern border of Ukraine, Russian president Vladimir Putin sent tanks and troops into Ukraine on February 24th.  

In response, President Biden imposed what he called “severe sanctions” against Russia. U.S. and European allies also agreed to restrict Russia’s access to the Society for Worldwide Interbank Financial Telecommunication (SWIFT), in an unprecedented move to remove Russia from the international finance system. In addition, this week, President Biden announced oil, gas, and energy sanctions on Russia, specifically banning the import of Russian oil and gas into the United States. These sanctions are expected to have a ripple effect across various industries, including plastics, clothing, cosmetics, and furniture, among other commodities.

Russia was the largest supplier of natural gas and oil to the European Union last year and several U.S. allies worry that disrupting the Russian energy industry will have dire consequences for the rest of Europe.

Russia and Ukraine combined account for approximately 29% of the global wheat export market and Ukraine is also a large producer of raw materials, minerals, chemical products and even machinery, such as transportation equipment. Much of Europe also relies on Russian exports of oil and gas, and global oil prices have already risen as a result of the escalating conflict.

The escalating tension is expected to roil major economies and supply chains around the globe. However, it’s not just the European Union that will be hit — many nations in the Middle East and Africa also rely on Ukrainian wheat and corn, and disruptions to food supply chains in those regions are possible. 

Will there be noticeable disruptions in supply chains?

As this conflict continues to escalate, many businesses with suppliers in the affected regions are rushing to find alternatives to keep their supply chains running without disruption. 

Global trade doesn’t exist without disruptions on some level, but in times of conflict supply chain mapping is essential. It is critical for companies to prioritize supply chain transparency and traceability to help mitigate disruptions in the foreseeable future. 

Find out more

Sourcemap offers an all-inclusive business continuity solution built on the world’s leading supply chain mapping software. For more information, and to identify how your supply chain might be impacted, reach out to Sourcemap’s team of experts.