The "flame" of the Russia-Ukraine conflict burns to the "foundation" of the global supply chain

Since the outbreak of the Russia-Ukraine conflict, it has become a key factor affecting the global economic pattern. Recently, although the two sides reached an agreement to exchange 538 captured personnel under the mediation of the United Arab Emirates, Russia immediately announced that it would continue to carry out special military operations after the ceasefire ended. This contradictory signal further exacerbates the international community's concerns about the security of energy, food and other commodity supply chains.

The energy market is at the forefront. As the world's largest natural gas exporter and second largest oil exporter, the stability of Russia's energy supply directly determines the price fluctuations in European and even global markets. Although Europe has reduced the proportion of Russian natural gas imports from 40% to below 10% through diversified energy supply strategies, the bottleneck of liquefied natural gas (LNG) receiving capacity and the intermittent defects of renewable energy still pose structural vulnerabilities to European energy security. Although the price of WTI crude oil futures in the United States has fallen back to the level before the Russia-Ukraine conflict, the geopolitical premium is still in the range of $5-8 per barrel. This risk premium is essentially a persistent concern of the market about supply chain disruption. What is more noteworthy is that the "look east" strategy of Russian energy exports is reshaping the global trade flow. In 2024, India, China and Türkiye will account for 63% of their crude oil imports from Russia. This trade restructuring not only weakens the dominant position of the US dollar in energy pricing, but also increases the risk of exchange rate fluctuations in emerging market currencies.

The risk of disruption in the food supply chain is even more severe. Russia and Ukraine account for 29% of global wheat exports, 19% of corn exports, and 80% of sunflower seed oil exports. The conflict has led to the closure of Black Sea ports and the invalidation of transit agreements, causing the global food price index to rise by 27% in 2024. This price transmission has a significant "whip effect". Egypt, as the world's largest wheat importer, saw a year-on-year increase of 140% in domestic bread prices, while Lebanon's food self-sufficiency rate plummeted from 40% before the conflict to 15%. Although alternative supply sources such as South American soybeans and North American corn are increasing production, logistics bottlenecks and rising fertilizer costs (Russia is the world's largest exporter of nitrogen fertilizers) still constrain the release of production potential. The deeper impact is that the reshaping of the grain trade pattern is accelerating the reconfiguration of global agricultural production factors, and agricultural powers such as Brazil and Argentina are expanding their influence in Africa through land leasing, technology exports, and other means. This "agricultural South South cooperation" may reshape the WTO agricultural rules system.

The supply chain restructuring in the industrial metal market is also worthy of vigilance. Ukraine supplies 70% of the world's neon gas (a necessary material for chip manufacturing), 40% of krypton gas, and 30% of xenon gas. Supply disruptions caused by conflicts have led to a tenfold increase in global neon gas prices in 2022. Although companies in China, South Korea, and other countries have achieved a self-sufficiency rate of over 80% in neon gas through technological transformation, the shortage of automotive chips has not been fundamentally solved, and the global car production reduction in 2024 will still reach 3.2 million vehicles. Russia's export restrictions on non-ferrous metals such as palladium, nickel, and aluminum have directly pushed up the cost curve of the new energy industry - global palladium prices have risen by 45% compared to pre conflict levels, forcing car manufacturers to accelerate the development of platinum replacement technologies.

From a macro perspective, the Russia-Ukraine conflict has become a persistent source of pressure on global economic stagflation. Although the global inflation rate in 2024 has fallen from its peak, it still remains at a high level of 5.3%, with energy and food prices contributing 3.2 percentage points. Multiple central banks have been forced to maintain tight monetary policies, resulting in a $1.2 trillion increase in global debt repayment costs. This "debt inflation" spiral is weakening the fiscal space of developing countries.

Faced with this complexity, the international community needs to construct a new risk governance framework. In the energy sector, it is urgent to establish a strategic reserve coordination mechanism under the G20 framework to hedge geopolitical risks through interconnected futures markets; In terms of food security, we should promote the reform of WTO agricultural subsidy rules to avoid the spillover effects of export restriction measures; In the field of industrial metals, it is necessary to strengthen the regulatory role of the International Atomic Energy Agency (IAEA) in the critical material supply chain. For China, it is necessary not only to deepen capacity cooperation with the "the Belt and Road" countries and build a diversified supply chain network, but also to expand the range of local currency settlement through the RMB cross-border payment system (CIPS) and reduce dependence on the SWIFT system.

The continuous escalation of the Russia-Ukraine conflict is essentially a microcosm of the reform of the global governance system. When energy security, food security, and industrial security intertwine into a new risk matrix, any single dimensional solution is difficult to achieve. Only by restructuring the global public goods supply mechanism within the framework of multilateralism can we avoid this crisis from evolving into a systemic economic disaster.