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Asia Stream: The cost of war

As the conflict in Ukraine enters its third week of fighting, what are the costs inflicted on global business?

NEW YORK -- Welcome to Nikkei Asia's podcast: Asia Stream.


Every week, Asia Stream tracks and analyzes the Indo-Pacific with a mix of expert interviews and original reporting by our correspondents from across the globe.

New episodes are recorded weekly and available on Apple Podcasts, Spotify and all other major platforms, and on our YouTube channel.

This week, we account for the cost of the fighting in Ukraine. These include the sanctions on Russia; the closures in Ukraine; the energy shortages in Europe; and surging global oil prices, commodities rates and inflation.

Which sectors are feeling the most pressure? How exposed is Asia? And what's the impact on the street?

In this episode, Jack Stone Truitt reports on the state of the global sanctions regime, Alice French reports on rising prices in Japan as she debuts with our new segment, "The Tokyo Dispatch," and J.P. Morgan's managing director of emerging-markets strategy, Saad Siddiqui, assesses the big picture of the macroeconomic impact of the war.

Asia Stream is hosted by Wajahat S. Khan, our digital editor and executive producer, and produced by both Khan and Jack Stone Truitt.

Related to this episode:

From Samsung to Sony, Asia tech grapples with Russia sanctions

Ukraine from Feb. 24 to March 9: Over 2.1m people have fled country, UNHCR estimates

Global chip shortage may soon turn into an oversupply crisis



(theme music in)


Hello and welcome to Asia Stream, where we track, report and analyze the issues and interests of the world's largest region.

I am Waj Khan, Nikkei Asia's digital editor, here in New York City.

Today's episode: The Cost of War.

As Russia continues to ramp up its attacks, the conflict in Ukraine is getting bloodier. According to U.S. estimates, at least 6,000 Russians, and over 1,000 Ukrainians have been killed, but the U.N. warns that the toll could be higher. Meanwhile, over 2 million have been forced to flee their homes and become refugees.

Wary of setting off a world war, the U.S. and its allies have instead deployed all available economic weaponry, crippling the Russian economy and turning the screws on Vladimir Putin and his oligarch friends.

Many companies are now rethinking their presence in Russia, with some slowing down their operations, and some even leaving.

But the Russian and Ukrainian economies aren't very large -- which means that most multinational companies aren't as exposed as they would be in, say, a war between China and Taiwan.

Still, even for companies not operating in Eastern Europe, the war has sparked new risks across the global economy -- which had barely healed from the crippling effects of COVID, inflation and supply chain disruptions.

Before the invasion started late last month, U.S. inflation had already reached a four-decade high in February.

Now, Russia's actions have pushed energy prices higher, supercharging costs for oil, wheat and precious metals, threatening to further prolong ever-higher inflation.

The latest from the ground is dismal.

Cease-fire talks that were held in Turkey between the two sides have failed as Russia continues its offensive.

Meanwhile, Goldman Sachs has become the first Wall Street entity to pull out of Russia, with J.P. Morgan announcing it will wind down its business in the country soon after. Russia, in turn, is moving closer to seizing and even nationalizing foreign-owned companies that are exiting its market.

In Asia, the cost of manufacturing is being driven higher by surging commodities prices.

And as sanctions continue to isolate Russia, some of them, like those targeting Moscow's nuclear industry, are fraught with risk for European and U.S. utilities.

Clearly, the cost of war is mounting.

In today's show, we try to keep a count of it.

You're listening to the sound of Asia, streaming in your ear.

From Nikkei Asia, this is Asia Stream.

(Theme music out).

KHAN: Zeroing in on the economic cost of this war, much of which will be driven by sanctions against Russia, isn't a one-man job. Joining me to get us up to speed is Nikkei Asia business and markets reporter and Asia Stream correspondent Jack Stone Truitt. Jack, welcome back to the studio.

JACK STONE TRUITT, CORRESPONDENT: Thanks for having me, Waj.

KHAN: So firstly, Jack, please just remind us of where things stand when it comes to actions taken against Russia from a financial perspective.

TRUITT: It's an ever-expanding list, but I'll do my best, Waj. Firstly, Putin and his numerous cronies have had their foreign-held assets frozen. And many -- including Putin himself -- face individual sanctions forbidding them from traveling to much of Europe, the U.S. and Japan. These include many Russian as well as Belarusian officials, and, perhaps more importantly, many Russian oligarchs who have serious political sway in Russia.

KHAN: I take it Putin's billionaire friends won't be pleased with having to vacation in Moldova instead of Monaco.

TRUITT: With the rate that their yachts and private jets are being seized, they may be better off driving somewhere close by anyways.

KHAN: So the sanctions regime is hitting Putin and his influential friends where it hurts, but what about the more sweeping sanctions affecting regular citizens?

TRUITT: Russia's banking system -- including its central bank and its largest banks -- has been sanctioned heavily. And you've probably heard a lot about SWIFT, the international payments system that has cut off a number of Russian banks from its services. All of which significantly undercuts the ability for Russians to conduct any transactions with the rest of the world or in currencies other than the ruble -- which, by the way, has lost roughly 40% of its value this year.

KHAN: Anything else?

TRUITT: Bans on Russian flights from entering foreign airspace have further isolated the country from neighboring Europe and much of the rest of the world. And many companies have or are facing pressure to stop doing business in Russia. Most of these have been major Western brands, like McDonald's or Starbucks, while Asian companies have traded more carefully. However, Uniqlo just announced its suspending its operations in the country after previously saying they would continue to do business in Russia, so the tide may be turning in Asia as well.

KHAN: Now losing your Big Macs and your frappuccinos is one thing, but tell me about what's happening with Russia's most vital sector: energy.

TRUITT: Russia is the second-largest exporter of both oil and natural gas. In many ways, as oil goes, so does the Russian economy. A former CIA case officer once told me that the first thing the Russia desk would do in the morning was check the price of a barrel of oil. When it's high, as it was in the first few terms under Putin, Russia's economy is strong. When it's low or hit by sanctions, as it has been more recently, the economy sputters.

KHAN: Interesting. And what is happening regarding energy sanctions at the moment?

TRUITT: In early days of the invasion, Western countries avoided targeting Russia energy exports. But this week Biden has signed an executive order banning the import of Russian oil, liquified natural gas and coal to the U.S. The U.K. has said it will phase out Russian oil imports by the end of the year.

KHAN: And the EU, which is presumably the largest consumer of Russian energy?

TRUITT: Well, about 40% of gas and a quarter of the oil for the EU comes from Russia, so they've faced pressure to impose similar bans but have understandably been more hesitant to make such a massive decision. The European Commission -- that's the executive branch of the EU -- said they will seek to expand clean energy and have Europe independent of Russian fossil fuels "well before 2030."

KHAN: Right now, 2030 feels like a long way off. So if its biggest customers in the EU are unable to wean itself off Russian energy, what do the U.K. and U.S. bans do?

TRUITT: Well, the U.S. is a massive energy producer itself, and only about 8% of its oil imports comes from Russia. For the U.K., that figure is only 6%. That's still a nice chunk of change for Russia to lose out on, but it's nothing compared to if the EU were to impose similar bans. And here in the U.S., the impact may be felt most by President Biden as he heads into midterms. Gas prices are soaring here and that is always bad news for whoever is in the White House.

KHAN: Jack Stone Truitt, with the latest on the sanctions regime against Russia. But beyond the number-crunching from corporate boardrooms and the corridors of power, the impact of the war is also being felt in everyday lives. To get a feel for the vibe on the street, and with her ear close to the ground, here is Asia Stream contributor Alice French in our new segment: "The Tokyo Dispatch."

ALICE FRENCH, CONTRIBUTOR: Konnichiwa! And welcome to "The Tokyo Dispatch," where each week I'll be sending updates from the narrow streets and neon lights of Tokyo, home to Nikkei HQ and hub for our East Asia coverage.

This week, I'm looking at the economic impact of the Ukraine war on people's everyday lives here in Japan. Prices of oil, gas and other commodities have been soaring across the globe.

It's not just big businesses that are feeling the squeeze, though. Sanctions and supply disruptions are starting to affect people's everyday cost of living, too.

I've been in Japan for three years now and have long enjoyed bragging rights over my family in the U.K. about how cheap it is to live here compared to back home.

I remember when I first moved here, one of the things I was most excited about was that I had instant access to good-quality sushi -- fresh fish, tasty rice, crunchy seaweed -- for a fraction of the price I was used to. Something that might have cost me, for example, 10 pounds (about $13) back home, I could now buy for 200 or 300 yen -- that's about $3.

But the Ukraine war may be spelling the end of dirt-cheap, fresh sushi in Japan, and thus the end of my ability to inflict food envy on my family during our weekly Zoom calls.

In a report from earlier this week, Nana Shibata, one of our writers here in Tokyo, went to chat to some of the fishmongers in the capital's iconic Tsukiji fish market about how the Ukraine conflict is affecting their businesses. One of the stallholders Nana spoke to lamented the sharp increase in the price of crab, a crucial ingredient for high-end sushi shops and convenience stores alike across Japan.

The price of crab in Japan has increased by a whopping 20% since the beginning of March. This is because 60% of crab consumed in Japan is imported from Russia -- and the disruptions are set to impact the price of Japan's domestically produced crab, too. Salmon and cod roe imports from Russia are also likely to be affected.

Now this is bad news not only for me, as one of my favorite sushi orders is kani maki, or crab rolls, but also for Japan's host of independent fish shops and sushi restaurants, for which the country's culinary landscape is famed. Some restaurants are having to adapt their menus to adjust for Russian ingredients they can no longer get hold of, or are closing early because of lack of stock.

The pressure of rising ingredient prices as a result of Russian sanctions may well be the straw that breaks the camel's back for many small restaurants who are already only just clinging on.

But the impact on sushi restaurants is just the tip of the iceberg when it comes to rising living costs. Even Tokyoites trying to save their pennies by avoiding eating out cannot escape the shock increase in utility costs at home.

I had quite the fright when my latest bills were delivered last week, seeing around a 17% increase in my gas and electricity costs compared to last month.

Post-pandemic inflation had already been hitting hard in Japan. The Cabinet Office's monthly consumer behavior survey has seen its consumer attitude index fall every month for the last three months.

Of course, the Ukraine war is not the only reason consumer optimism has taken a nosedive. Russian sanctions have merely fanned the flames of what was already a raging fire of living-cost increases worldwide.

But signs that the Ukraine crisis may lead to even higher inflation than before have set off particularly loud alarm bells in Japan, where wage rises are hard to come by. In December last year, the Bank of Japan estimated that inflation would rise to 5.5% in 2022, the highest rate since 2008.

Wages, however, are only predicted to increase by a maximum of 3%, and even that figure is optimistic -- there hasn't been a rise of 3% or higher for 28 years.

The true economic impact of the Ukraine war on consumers, not only in Japan but the world over, remains to be seen, but one thing is for sure. At least for the time being, I'll be enjoying sushi as an occasional luxury, rather than a daily staple.

SIGN OFF: This has been Alice French, with a dispatch from Tokyo, for Asia Stream. Mata raishuu.

KHAN: As Russia's war in Ukraine enters its third week, global financial markets have been gyrating wildly. Stocks, bonds, currencies and commodities have all been witnessing extreme swings since the conflict began, as investors search in vain for safe havens. The economic damage of the war is not just limited to Russia, Ukraine and the immediate vicinity; the IMF has warned that the economic collateral damage will be felt widely, as inflation could surge globally and economic activity will be adversely affected, at a time when the world is still healing from the COVID crisis.

To help us understand and navigate these complex and interrelated issues, I talked to Saad Siddiqui, an economist and investment strategist at J.P. Morgan, where as managing director of emerging-markets strategy, he follows the global macroeconomy and financial markets, and is well-placed to unpack the varied economic and financial channels through which this crisis will impact the globe. Here is our conversation.

KHAN: Saad Siddiqui, welcome to Asia Stream.


KHAN: All right. Now let's start with a broad explainer. And the view from London over there. Can you characterize the economic nature of the geopolitical shock we are witnessing -- how to think about the costs and benefits of it all, so to say, so because let's keep in mind that this new crisis, comes just when the world was barely healed from COVID.

SIDDIQUI: Sure, so let's unpack this a little bit. So first of all, in terms of the direct impact on the Russian economy itself, we're talking about a, you know, pretty severe economic shock. This is an economic shock, that is going to lead on our estimate something in order of magnitude of a 10% contraction in GDP. So that's along the lines of what Russia witnessed, say, back in 1998, when it had its debt crisis. We're also seeing a broader shock, which is propagating across Europe. Now Europe is the region which is most exposed directly to Russia. And that's not just in terms of the energy dependency, which is often talked about. But there're also, you know, trade links, and financial links, as well, which are more important in the European context. And that's where the financial market impact really has been most intense. So if you look at the currencies in Eastern Europe, of Hungary, of Poland, etc., those are the ones that have reacted the most to, to the consequences of this invasion in the last, in the last few weeks. Now, we do think you will also see a pretty significant growth hit to Europe as well. So we're going to see growth fall across the region. I think it's still very difficult to fully calibrate the full extent of what the magnitude of the growth hit to Europe, but it is going to be something which is significant. One thing that I would say here, however, is that the you know, we're not here, we're not really talking about a financial crisis, right, because even though we've seen a lot of headlines and a lot of measures, by the U.S. and their allies to disconnect the Russian banking sector, from, from the global financial system, Russia's overall exposure, financial exposure to the rest of, the rest of the world, isn't so large, to be systemically important, it's still an impact, which is reasonably well-contained in the grander scheme of things. It's the economic shock, that's probably going to be larger here. And then, of course, you've got the commodity price angle. And here, you know, I think, you know, people talk about oil and gas a lot, because that's what is kind of most obvious, that's what the headlines focus on. But really, I think it's worth unpacking the entire scope of the, of the prices that we're seeing on commodities. So obviously, you've got oil prices, which are at, you know, the highest that we last saw at levels, you know, back in 2007, 2008. Natural gas as well has moved up very significantly. And that's, you know, going to be quite inflationary, especially for Europe. But let's keep in mind, Russia and U-- Russia is not just an energy exporter. And actually, between them Russia and Ukraine are actually exporting critical commodities across the board. So to give you some numbers, I mean, Russia is responsible for something like 40% of the world's palladium supply. And then we come to agriculture, right? You know, we're talking about Russia and Ukraine, between them 30% of global wheat exports. So for a lot of the emerging markets that I look at, and my team look at, these other elements also are really important, especially because in the emerging world, people spend a lot more of their income on food and energy, especially on food, compared to the developed world. So that is going to be hitting people's real incomes. And that's going to be, you know, pretty significant, the shock in its own right.

KHAN: Wow. So moving from the commodity scale now to the inflationary impact, I remember reading just a few hours ago, the bets on long-term inflationary pressures here in the United States are going higher, that people are doubling down for this inflation business to continue longer than it was expected. Now that puts the Fed, whose job it is to make sure that inflation doesn't happen, that puts it in, in a bit of a pickle, how do you see inflationary measures? Do you think they'll stick around? And what is going to be the global impact if they do?

SIDDIQUI: Sure. So I think it's worth here to differentiate between different countries and different regions, but let's start with the U.S. and with the developed world more generally. So you know, clearly the starting point was one in which inflation was already problematic, you know, so we were seeing multiyear-, multi decade-high levels of inflation in many countries. It was clearly accelerating in the U.S. over the last few months as well, you know. Part of that was attributed to what people were calling, you know, supply-side bottlenecks, the fact that in the aftermath of COVID, global, global supply chains were disrupted, that caused shortages. In addition to that you had, you know, a lot of stimulus being implemented across the developed world, right? So whether it was rock-bottom interest rates, or a very expansive fiscal policy, so people getting direct income transfers, you know, from the government, during COVID, that gave consumers, you know, some extra disposable income. And, and, you know, they were able to build up a large degree of savings through the last couple of years, during these successive waves of COVID. And as that was easing off, you had a surge of, you know, pent-up demand, and people going out and spending money. So that demand-side element and the fact that already you had some disruptions on supply chains, the ability to produce goods, that resulted in the prices of goods, especially durable goods, all right, moving higher. And that was the whole inflationary problem that we were dealing with, even before this new shock, the Russia-Ukraine shock has hit us. So, you know, people were talking about, you know, and the Fed was talking about the need to start normalizing monetary policy to start raising interest rates, because inflation was becoming an increasing concern. And that means that when you get hit by another bout of inflation, via these higher commodities prices, it gives very little room for maneuver for central banks to try to offset the squeeze, you're going to get on real incomes, and the negative growth consequences of this one mitigating factor, you know, for the U.S. at least, is that the starting point is quite strong. You know, the unemployment rate is at very low levels right now. So the overall labor market, the job market, is not in a bad shape. So, there are, there is some ability, I think, to weather this storm. But as far as policymakers are concerned, monetary-policy makers are concerned, at least central banks. In the developed world, they don't have much room to be cutting interest rates or to be stimulating the economies in response to the shock.

KHAN: And if we were to move towards areas which will have space to maneuver, is there going to be some sort of momentum for some sort of windfall. Do you see anybody actually gaining from all of this in the short term?

SIDDIQUI: Sure. So I think in a relative sense that when you do get these large shifts in commodities prices, there's clearly a wealth transfer, right? There's an income transfer from those countries that are importing commodities towards those that are selling those commodities. So if you're an oil exporter, in the GCC, or if you're a diversified commodity exporter or metals exporters, like we have in Latin America, whether it's Brazil, Chile or Peru, then clearly you're going to get, you know, windfall that comes from these higher commodities prices. Now, you know, they're still going to see inflation, the central banks are still going to have to respond to the inflationary impulse, they don't have that much room for maneuver on that front. But at least you do get a bit of a cushion. And you get the cushion from increased commodities prices. So you do have this sense that some countries will have a cushion. But if you're an importer, then you're going to really have very little in the way of, of mitigates here. If you're an emerging market already facing high inflation, you're importing energy and food, you're, you know, let's keep in mind, it's the emerging markets who are much more scarred in the aftermath of COVID as well, that just kind of doubles up the, the set of problems that you're going to be facing in the coming months.

KHAN: Right now. So let's pivot to Asia, especially China now. In a way, first of all, let's try to understand the thesis broadly that Asia is a net commodity importer, speaking broadly. But Asia was behind the curve, when it came to comparing it to other advanced countries in terms of the COVID shock. So how is this particular shock going to make things longer or harder to recover? Where do we go with Asia, especially, of course, with the dragon in the room, which is China, which is now linked in a way geopolitically to Putin as well. But there's a thesis which is going around that in a way, Putin, Putin's Russia, rather, is going to be forced into the embrace of China in a way Russia might become China's gas station, you know, where, where, where cheap energy is being exported to China, and nobody else? Because the Chinese are the only ones who will do business with Putin, looking forward. So how do you see that play out?

SIDDIQUI: Sure. So as far as Asia is concerned, first of all, I think it's worth highlighting that the direct linkages to this war are, are generally limited in the sense that Asia's trade and financial linkages are generally limited within the, within the sphere of emerging markets to Russia and Ukraine. So it's a bit remote from, from some of those direct consequences that we discussed earlier. You're right to say that Asia is a net commodity importer. So countries like India, for example, China, Korea, they are all large energy importers, and they are going to see their energy import bill go up. So it is true that if you look at Russian oil that is being sold at a discount right now to Brent crude oil, which is, which is kind of the, the benchmark. But that said, all of these countries are going to face a higher import bill, both for energy and for, for food and the other commodities, as well. Some of these countries we know are tech exporters. And you know, there's been talked for a long time about disruptions and in the ability to procure semiconductors and so on, there have been shortages of key commodities and materials. And I think there is clearly risks, that as, as we mentioned earlier, you know, Russia isn't just an energy exporter, you know, there's a lot of metals, a lot of other key ingredients that go into tech exports from Asia, and all of that supply chain might be further disrupted. So that's another way through which, you know, due to the inability or ability or higher prices of these raw materials that go into tech products, and automobiles as well, you know, some of that might, some of that might be, might be hampered. That said, there are some countries in Asia, you know, that do benefit from higher commodities prices, Indonesia, for example, is one of them, you know, it will benefit from, from higher commodities prices. Now, as far as China is concerned, it's an interesting one, because we know that China already was, or is in the midst of a policy pivot, and economic policy pivot. And No. 2, you know, because the omicron wave hit Asia much later than the rest of the world. And China especially, has had a very low tolerance or a zero-tolerance policy towards COVID, which is still, which is still ongoing, that complicates things, you know, for them. On the first bit, you know, it's been discussed quite a lot. The, the, you know, the the change in terms of regulatory attitude of the Chinese authorities over the past few quarters, the issues in the real estate sector, and so on, all of those were, you know, part of a broader mix of what seemed to be a shift in, in kind of China's broader economic strategic priorities. So, you know, this new shock is clearly going to, you know, exacerbate some of those challenges, you know, but that said, I think there are, you know, a lot of mitigating factors as well, you know, so there are challenges, but there are also mitigating factors that, that Asia has with respect to the other emerging markets. And one is that I think people generally see Asia as a little bit of a safe haven. So as far as financial investors are concerned portfolio investors in the markets that I follow the currency and the debt markets, they generally tend to see Asia as a lower volatility bit of a safe haven and the fact that Asia didn't have the same type of inflationary surge that we had elsewhere in the world, whether it's in Central Eastern Europe or Latin America, or even some of the developed markets, means that the starting point is, you know, gives gives the Asian countries a little bit more breathing room, then then the other is in, say, Latin America or in Eastern Europe.

KHAN: Now, this is a question, which might be difficult to answer, but must be asked is, if you were to rattle off a list of Asian countries -- let's keep it simple, three Asian countries -- which, given the sanctions regime and the other pressures and shocks emerging from this war, three Asian countries which are going to be potential winners, and three Asian countries which are going to be exposed to the new sanctions regime and the other shocks coming in from the war, who would make it to your list?

SIDDIQUI: So I think the way to think about this is twofold. One is that those countries in Asia that have no very large stock of FX reserves, so of, of FX assets that they've built up during the good times. And as a result of, you know, running external surpluses with respect to the rest of world trade surpluses, those countries are able to insulate themselves from these types of shocks that you see. The other factor which we should think about are those countries that have some degree of commodity exports, so they can benefit, at least in a relative sense, from, from higher commodities prices, you know, like China is one of them. Taiwan, Korea, these countries can remain relative safe havens within emerging markets. And then on the other hand, you have countries which are large importers, of commodities, of food, of energy, they don't have a very large stock of foreign assets to be able to insulate themselves from shocks. They may not have a lot of maneuverability in terms of an already high level of indebtedness of the government and those are some of the smaller economies, the importers, countries like Sri Lanka, like Pakistan, are also in that list.

KHAN: If one were to paint this on a historical map, is this an era defining event? Can we hold it up there with 9/11? And the global financial crisis of 2008? COVID? The OPEC oil shock of the '70s? Can we start in our heads to summarize this on and place it on that list? Or is it still early days of the war?

SIDDIQUI: Well, I guess that's a pretty difficult question. You know, it's, it's clearly still very early days in terms of where we are in this war. But what we can say is, you know, already, it's clear that this has had a big shift in terms of thinking of European defense policy. We saw how Germany overturned long-stan- - - long-standing foreign policy and defense policy over the last, over the last few weeks. So clearly, it has been quite a defining moment in that sphere. So another existing trend, which this war might accelerate, is a move towards energy security, right? Energy security is not a new thing, it's clearly been ... and the transition towards sustainable energy, that discussion has been ongoing, and policies towards that end have been ongoing already for some time. But I think this will clearly, you know, accelerate, and moves towards that, you know, during COVID, there was a lot of talk about supply chain resilience, and the need for countries to not be dependent on global supply chains, and to, and to kind of make those more robust. And this adds the energy element to that discussion as well, and really brings that to the fore. So I think, you know, I don't know whether this is going to be one of those events that gets etched into our minds as, as, a as a real turning point, defining moment, for a global kind of economics or geopolitics, or policy. But I think in a few dimensions, it's clearly going to be very significant.

KHAN: All right, so before I let you go, I must confess that the one strand, and the one common theme that I am picking up here is that commodity prices were going higher. And with war, which is essentially disruptive, they will continue to go higher. But that's just me talking. As far as disruptions are concerned, it would be great if you can lay out for us what further types of disruptions are expected from and around the war, which will affect and keep on affecting commodity prices?

SIDDIQUI: Sure. So it's a very good question. I think the market right now is having to grapple with both real, actual disruptions, but also the fear and the risk that there may be more disruptions, or restrictions in the future. So you need to price both of those things. And that's, and, and depending on them on the different markets, you know, we're either dealing with actual disruptions or fears of disruptions. So let's unpack that a bit. In the case of oil, for example, we know right now that the private sector, in many instances by its own volition, is suspending sort of purchases, of Russian oil. So that counts as a disruption. You know, broader-ranging actions by Western governments to restrict purchases of Russian energy could also come into play. And that's also driving market prices in the case of agriculture, and we know that both Russia and Ukraine are major exporters of wheat and other commodities, things like sunflower oil and maize. And right now, agricultural exports are seriously hampered. And in addition to the fact that your current exports are being hampered, it's very difficult to, say, plant for the next season, as well. And that means supply disruptions could end up being longer-lasting. You know, finally, if you take base metals, the actual supply of base metals from Russia and Ukraine, it's not being disrupted as much to my knowledge, but the market is still pricing in the risk that you may see some supply disruptions in the future.

KHAN: Right. And that begs the obvious question, if we know it's coming our way, what can we do to, well, disrupt the disruptions and to control commodity prices?

KHAN: Obviously, much depends on how things pan out on the ground. And what can be done in the short run is quite limited. That said, you know, we know in the case of oil, there are a few factors that are worth watching for in the coming days and weeks. One is the potential for a deal with Iran that could bring Iranian crude oil supply onto the market. And that could help temper things. The OPEC countries also may pump a little bit more oil to, to, to ease some of these restrictions. And also, there's the possibility that countries could begin releasing their strategic petroleum reserves to further help ease the shock of disrupted supplies.

KHAN: Saad Siddiqui, managing director of emerging-market strategy at J.P. Morgan from London. Saad, thanks for coming on Asia Stream, and we hope to have you in our studio the next time you're in New York.

SIDDIQUI: Thank you very much. Well, I really enjoyed our discussion and I hope to see you soon.

KHAN: That's it for Asia Stream this week.

(Theme music in)

KHAN: As always, I encourage you to head to Nikkei Asia at for more in-depth coverage of the Ukraine invasion and all things related to Asia. If you enjoyed this podcast, please share, subscribe and leave us a review -- and hopefully, a five-star rating! And a reminder that Nikkei Asia is currently offering an exclusive discount for our podcast listeners: to redeem please click the link in the episode description. This episode was produced by Jack Stone Truitt and yours truly. I'm your host, Waj Khan.

Let's stream on, next week.

(Theme music out)

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