As tensions with Russia along the Ukrainian border continue to rise, global trade is beginning to suffer, adding to rising global oil prices causing more pain at the pump for Americans. Gasoline prices in the United States rose this week to their highest level in eight years, as investors worried that a military conflict in Eastern Europe would drive up energy prices.
Investors attempt to price in the consequences
The crude oil and gasoline price has risen in the last month as Putin’s forces gathered on the Ukrainian border. As a result, the diplomatic back-and-forth has thrown financial and commodity markets into a tailspin as investors try to price in the consequences of an armed conflict and U.S. sanctions against Russia for the global economy.
Americans are already concerned about inflation, which is at a 40-year high. Biden warns that if Russian President Vladimir Putin decides to invade, gas prices could skyrocket. Instead, it’s a recognition of Biden’s risks ahead of the 2022 midterm elections. Despite the nation’s strong economic growth last year, inflation has become an utter failure for Democrats, apnews.com posted.
The U.S. president declared Tuesday that they prepared to deploy all the tools and authority at our disposal to provide relief at the gas pump. In addition, they are taking active steps to alleviate the pressure on our energy markets and offset rising prices.
Russia is the third-largest oil producer in the world
The global oil market ultimately determines prices at the pump, and Russia is the world’s third-largest oil producer. While Russia primarily exports its oil to Europe, experts believe that any disruption to the market and the world’s oil supply would be felt globally.
According to Ed Hirs, a possible future invasion will hit the average American in the wallet right away, an energy fellow at the University of Houston. Hirs added that a 1% decrease in supply could cause oil prices to rise by 20 to 25%, citing previous research.
If fighting breaks out, Spectrum News reported that it could impact the oil supply in two ways: the United States could impose sanctions on Russian energy exports, and any conflict within
Ukraine would also disrupt oil flow.