Brent crude, the global benchmark, increase at most 6 percent to more over $100 a barrel after Russia invaded Ukraine and could soar even higher as Russia responds to sanctions from the United States and Europe. Russia is a major energy exporter to Europe.
“Potentially, Russia could retaliate by restricting oil exports,” Patrick De Haan, head of oil and gas analysis at GasBuddy, said on Thursday. Prices at the pump are likely to reflect the fallout from the conflict almost immediately, he said.
Russia’s Attack on Ukraine and the Global Economy
An increased concern. Russia’s attack on Ukraine could cause Energy prices skyrocketed and food and can wow investors. The economic damage from supply disruptions and economic sanctions will be severe in some countries and industries and go unnoticed in others.
Some economists have noted an unpleasant precedent when it comes to a gasoline shock.
The soaring energy prices of the 1970s contributed to the exacerbation of inflation, making price increases rapidly an enduring feature of the economy, a trait that only faded after a painful response from the Fed. The central bank pushed interest rates – and unemployment – into double digits to pull prices up to a peak in what is now known as the “Great Inflation”.
That episode comes after years of rapid price increases in which the Fed has been slow to cut prices. This time, the central bank is preparing to pull support back in time.
The Fed is expected to begin a series of rate hikes in March, policy moves that will slow lending and spending, which could lead to weaker hiring, low economic growth and a more modest price increase.
Julia Coronado, founder of MacroPolicy Perspectives, said: “The Ukraine situation has not changed, it is likely that the fundamental conclusion is that it is time for a change in monetary policy. “They won’t just delay all the rate hikes because there’s a war in Ukraine.”
While the Fed has primary responsibility for controlling inflation by guiding economic demand, the White House is trying to devise policies to help supply keep pace with demand and has pledged to do what it can. to keep oil and gas prices from rising. insurmountable levels in the Russian conflict.
“I know this is hard and Americans are hurting,” Mr. Biden said in a statement on Thursday. “I will do everything in my power to limit the pain the American people are going through at the gas pump. This is very important to me. But this aggression cannot go unanswered.”
https://www.nytimes.com/2022/02/25/business/economy/inflation-pce-index.html A key inflation gauge is still on the rise and war could make it worse