Russia blockades Ukraine from exporting goods, invoking an international food crisis

Yahoo Finance's Rick Newman details how Russian forces are blocking Ukraine's supply chains from exporting wheat and food, causing a ripple effect across European and Asian countries.

Video transcript

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RACHELLE AKUFFO: The Russia-Ukraine war continues to send economic shockwaves throughout the globe, as Ukraine's economy weakens and sanctions hit Russia. Let's bring in Yahoo Finance's own Rick Newman to discuss this. So what exactly is this doing to the global economy, Rick?

RICK NEWMAN: Hey, Rachelle. We've obviously been talking about energy markets for the last three months. Oil around $110 a barrel. That could get worse. Everybody needs to know we're not out of the woods on this. If there is a-- some kind of embargo on Russian oil in Europe, as the Europeans are talking about, at some point this year, very well could push oil prices higher. But what's becoming a little bit more urgent now is concerns about food scarcity. This is a bunch of different factors. First of all, Ukraine is a major producer of sunflower oil, wheat, barley, and corn.

And people may not be aware of this, but Russia is basically blockading all of Ukraine's ports on the Black Sea, which is the main way it gets all that food out to global markets. And you just really can't move all of that by rail or by road through Europe. So there are growing concerns about food scarcity. There was a new report out this week by the Eurasia Group saying this could become an acute problem in some developing countries in the Middle East, Africa, and in Asia. And we could end up, by the end of the year, with an additional 100 million people or so facing food scarcity and an additional 100 million or so newly living below the poverty line.

Just one other wrinkle I'll throw in here, the former German ambassador to Russia told the German magazine "Der Spiegel" recently that he thinks Russia is causing food problems on purpose throughout the world. They did this in Syria. And what that can do is trigger refugee flows to Europe and into other places from people who just can't get enough food wherever they're living. And that has actually been part of Putin's game plan before, and he may just be doing that deliberately to try to destabilize Europe further. So the longer this goes on, the worse the economic toll is going to be and the farther we're going to see it impacting people.

SEANA SMITH: It certainly is very, very worrisome just to think about. But, Rick, obviously, the US, other Western nations want to jump in, want to try and help in order to avoid something like this from happening. Can they do anything, though?

RICK NEWMAN: Let me say one word we've all become very familiar with-- supply chains. So with regard to things like wheat and cooking oil, the world does have enough of this stuff to make up for shortages. By the way, another big shortage is fertilizer. Turns out Russia itself is a big producer of fertilizer, and they have stopped exports of fertilizer. So the cost of fertilizer is now doubling.

So other nations have this stuff, but we just can't easily move it to new parts of the world. I mean, this is what we all kind of learned during the last two years of the COVID pandemic is you just cannot reroute stuff easily from one place to another. So in a year's time perhaps, we're going to-- we could start solving these problems, assuming the situation stays the way it is. But, you know, the next few months are looking somewhat difficult.

SEANA SMITH: All right, Rick, thanks so much. A story, of course, that we will keep on here at Yahoo Finance.