Editor’s note: We have extensively tracked the Russia vs Ukraine conflict since December. If you need more context, we highly recommend reading our Big Story on the historical roots of the conflict and this timely explainer on the effectiveness of economic sanctions, the return of the Cold War, what is driving Vladimir Putin, and India’s “balancing act.”

Researched by: Sara Varghese & Prafula Grace Busi

Where we are now…

Death toll: The latest UN estimate for civilian casualties is 516 killed and 908 injured. OTOH, officials in Mariupol claim that 1,300 civilians have been killed just in that city. These numbers are fairly worthless given how little we know about what’s happening in cities being pounded by air strikes and shelling. The number of refugees: over 2 million. 

State of the invasion: In a most shocking attack on civilian targets, Russian bombs targeted a maternity and children’s hospital in Mariupol. The number of casualties is unknown. Moscow insists that Ukrainian forces had “equipped combat positions” within the hospital—even though the post-bombing videos show heavily pregnant women and children being evacuated. 

Also this scene from Mariupol from the New York Times:

“Hundreds of casualties have been reported, people have taken to cutting down trees to burn for heat and cooking, trenches have been dug for mass graves and local authorities have instructed residents on how to dispose of dead family members—wrap the bodies, tie the limbs and put them on the street.”

Point to note: Moscow had promised to observe a “regime of silence” to allow civilian evacuations in five cities—including Mariupol. Ukrainians say that Russian troops blocked the buses that were arranged to transport people through the humanitarian corridors.

Meanwhile, in Chernobyl: There was great alarm over reports that a power line supplying the nuclear plant was damaged during the Russian attack. Electricity is required to cool the nuclear waste at the defunct plant. But the UN’s atomic watchdog IAEA insists there is no reason to worry—claiming that the “spent nuclear fuel stored there had cooled down sufficiently for it not to be an imminent safety concern.”

Point to note: Western analysts insist that Putin’s invasion has not gone to plan. While Moscow will most likely prevail, the image of the powerful Russian military has been shattered. The result: “Militaries in Europe that once feared Russia say they are not as intimidated by Russian ground forces as they were in the past.” A former Russian foreign minister agrees, tweeting: 

“The Kremlin spent the last 20 years trying to modernise its military. Much of that budget was stolen and spent on mega-yachts in Cyprus. But as a military advisor you cannot report that to the President. So they reported lies to him instead. Potemkin military.”

What’s next: The Ukrainian foreign minister says Moscow is desperate for some kind of decisive victory before it enters negotiations—from a position of advantage. And “therefore our task is to stand for the next 7-10 days.” But that may be difficult since almost everyone expects Putin to pound the cities to rubble:

“US intelligence agencies say Mr Putin has been frustrated by the slow pace of the military advance and is likely to double down on using brute force, which could mean far more destruction and much higher civilian casualties. Russian forces have stepped up rocket, artillery and air attacks on cities, hitting a growing number of civilian targets; Ukrainian officials say the Kremlin, so far unable to win military victory, is instead trying to destroy Ukrainian morale.”

Key point to note: The Western effort to supply Ukraine with military assistance has been in disarray as well. For example, they haven’t been able to figure out how to get Kyiv the military jets it desperately needs:

• First, the US announced that Poland will give its Russian MiGs to Ukraine—and get F-16s from Washington. 
• The Poles said ‘no thank you’—and offered to send those MiGs to the US base in Germany, asking Americans to make the actual delivery. 
• A very surprised Washington took a hard pass on that plan—saying that flying combat aircraft from NATO territory into the war zone would “raise serious concerns” for the entire alliance.
• The reason for this ‘pass the parcel’ silliness: “Russia's defence ministry warned this week that countries offering air fields to Ukraine for attacks on Russia may be considered as having entered the conflict.”

Map to note: This is the state of play right now:

Peace talks: The foreign ministers of Ukraine and Russia will meet in Turkey—the highest level of talks between the two thus far. But no one expects it will lead to an agreement. Meanwhile, Russia has been sending mixed signals about its aims in Ukraine. While Putin said the continued resistance “called into question the very future of Ukrainian statehood”—another senior official claimed “Russia does not plan to ‘occupy Ukraine, destroy its statehood or overthrow its government.’”

About those Indian students: The Indian government has claimed much of the credit for evacuating them out of Ukraine. But new reporting in Scroll and Indian Express shows that New Delhi did very little to help. Employees of education companies—who arranged for admissions and offered logistical support—were the real good samaritans. They arranged for food, lodging and buses in nearby small towns where the students had fled. The kicker: Despite promises, these companies have not been reimbursed for their expenses by the government as yet.

About those sanctions: Both the UK and the EU announced fresh rounds of sanctions. Kremlin reacted to the US decision to ban all Russian gas imports by calling it an “economic war,” adding: “You see the bacchanalia, the hostile bacchanalia, which the West has sown—and that of course makes the situation very difficult and forces us to think seriously.” But Moscow made clear it was not threatening to cut energy supplies.

Meanwhile, in Russia: Global ratings agency Fitch downgraded Russia’s credit to “C,” or junk status—warning that it is at “imminent” risk of defaulting on its $40 billion debt. 

What this means: for Russians: 

“Inside Russia, a default would mean tremendous economic hardship for ordinary people. A lack of capital could mean massive unemployment, with the government and other major employers unable to raise funds to meet salaries. Consumer credit would evaporate, with Russian banks cut off from international financial systems.”

What this means for India: a “contagion risk” as foreign investors become more risk-averse:

“A Russian default could shake the economies of developing market countries—favoured by some lenders for their high-yield upside—so profoundly that investors could ditch those venues in favour of safer bets, experts say. That would flood Western markets with capital pulled out of China, India, Brazil and eastern European economies, fueling even higher price inflation.”

Looking ahead: The looming global oil crisis

Russia is the world’s top exporter of crude and oil products combined—producing around 7 million barrels per day (bpd), which accounts for 7% of the world’s supply. Hence, the escalating financial war between Western allies and Russia poses a clear and present danger to the global economy. Spiralling oil prices spur already high inflation rates—and India may end up what every economist most fears: stagflation. Experts warn that the price per barrel may go as high as $200 a barrel. 

We look at how soaring oil prices will affect different parts of the world.

The United States: is the most protected among the Western allies. In 2021, it imported only 3% of its crude oil from Russia. So the recent ban on Russian energy is not likely to hurt very much. But soaring global prices could increase the pain at the US gas pump past $5 a gallon—which may become a political risk for the Biden administration. For now, Washington can afford to take a big moral stance.

The big downside: for Washington is that it now has to cuddle up to the countries it once shunned—Venezuela, Saudi Arabia and Iran. The plan is to persuade them to increase their oil supplies—to keep global prices stable. And they are not making it easy. The leaders of Saudi Arabia and UAE have simply refused to get on a call with Biden. And any assistance will come with its own price tag:

“The Saudis have signaled that their relationship with Washington has deteriorated under the Biden administration, and they want more support for their intervention in Yemen’s civil war, help with their own civilian nuclear program as Iran’s moves ahead, and legal immunity for Prince Mohammed in the US, Saudi officials said. The crown prince faces multiple lawsuits in the US, including over the killing of journalist Jamal Khashoggi in 2018.”

Also this: The expanded OPEC+ now includes Russia—which has grown closer to the Middle Eastern countries in recent years. And that’s why the Saudis and Emiratis have declined to pump more oil—and are sticking to the production plan approved by their cartel. They have no interest in pissing off Moscow.

Impact on Russia: The US only accounts for 3% of Russia’s oil exports—so this move is unlikely to do much damage. And it will likely make up the shortfall by selling to India and China. But the Americans insist the effect is incremental but important:

“By eliminating some of the demand, we’re forcing the price of Russian oil down, and that does reduce revenue to Russia. In theory, it is a way of reducing how much Russia earns on every barrel it sells, maybe not by a lot, but by some.”

Where it may hurt you: is at the stock markets—which have been gyrating wildly around the world since the US announcement. It reflects the fevered speculation around how high the oil prices will go and how much it will hurt economic growth. Experts expect the “dizzying hour-to-hour swings to continue.” As one expert puts it:

“Markets run on greed and fear and right now there is a lot of fear… The fear is that if we can’t get oil, where’s it going to come from?.. [With this ban] they have made [7%] of the world’s production toxic… that production is essentially unbuyable in many ways, and if you do that in an already very tight market the demand [and prices] are going to go up.”

And it's not just oil: Washington’s move spurred a crazy surge in the price of nickel—which doubled within hours—and trading had to be suspended in London. The reason: Russia is the world’s third-biggest producer of nickel—which is needed in batteries, especially those used in electric vehicles.

Europe: has no intention of joining any energy ban on Moscow. Russia provides about 40% of Europe’s natural gas for home heating, electricity and industry—and about a quarter of its oil. The problem isn’t the oil—which can be bought from other countries. The gas is almost impossible to replace overnight. The reason: it is supplied through pipelines from Russia. It can turn to liquefied natural gas (LNG)—but the continent doesn’t have enough pipelines to distribute gas from the ports to the inland areas.

Point to note: The invasion has increased the sense of urgency about cutting the umbilical cord that ties the EU to Russia. It announced plans to reduce its dependence on Russian gas by two-thirds this year—aiming to end all reliance on Russian fuel “well before 2030.”

The impact on Russia: Moscow has made noises about cutting off gas supplies to Europe—but is unlikely to do so. As Bloomberg News notes: “Europe spends as much as $1 billion a day to pay for coal, gas and oil imported from Russia—indirectly funding the war machine that’s rolling through Ukraine.” Another study found that European countries pay $285 million a day just in oil payments to Moscow. So don’t expect Putin to deliver on his threats anytime soon.

The global fallout: Europe will pay the highest price if it follows the US’ cue—with Russian experts promising prices as high as $300 a barrel. Even without a EU ban, the impact of higher prices is likely to be widespread: 

“Analysts at Bank of America said a broad blockade of Russian oil would trigger ‘a supply shock nearly equivalent to . . . the 1979 oil crisis’, which caused immense economic pain in western nations. Prices could ‘potentially exceed $200 a barrel’ under such a scenario, they said. Cuneyt Kazokoglu, head of oil demand at consultancy FGE, said the supply shock akin to 1979 could leave the world ‘on course for another severe global recession.’”

India: We are the most vulnerable as we import 84% of our oil. And our biggest fear is stagflation—a combination of soaring prices and slowing growth. Here’s how it could play out:

• In India, wholesale and consumer inflation are already soaring. Rising oil prices will hike up the price of everything on the manufacturing side—which are usually passed on to the buyer. 
• Typically, high inflation means people are spending more—which is good news for economic growth.
• But we instead have a pre-existing problem of weak consumer demand—which has slowed the growth of the economy in the last quarter—even though it was festival season.
• So higher prices mean people have less buying power—and therefore less demand and economic growth. 
• And if companies don’t pass on the added costs to the buyer, they will feel the pain in their profitability margins—which again hurts investment, job creation and growth.
• Some economists already think we are experiencing stagflation—while others disagree. But all are unanimous that soaring oil prices will likely push us over the edge.

A possible alternative: Nilesh Shah in Bloomberg News suggests there is also opportunity in crisis:

“There is also a silver lining to the dark cloud if India can revive the Rupee-Ruble trade to become a preferred supplier to Russia. Russia will need the support of a large economy like India for filling the gaps in their economy heavily impacted by the sanctions. There will be enough spoils to share with China which will be the first preference for Russia due to size and proximity.”

Of course, it remains to be seen how that will play out in terms of our geopolitical relationship with the US.

The bottomline: As Bette Davis famously said: “Fasten your seatbelts; it’s going to be a bumpy night.”

Reading list

• Associated Press has the best explainer on the global fallout of the US oil ban. 
• CNN and Wall Street Journal (paywall) look at the cold shoulder the US is receiving from other oil-producing countries. 
• BloombergQuint, Indian Express and Al Jazeera look at the impact on the Indian economy.
• The Guardian looks at the two possible trajectories of the invasion—and neither is good.
• Also in The Guardian: an urgent plea not to treat President Zelenskyy as a global “heart-throb”:)
• BBC News explains why private military firms see opportunity in the war.