Russian Military Ops In Ukraine Push Brent Crude Past $100 A Barrel, A Record Since 2014
Following Russian president Vladimir Putin’s announcement of a ‘special military action’ in the eastern part of Ukraine on Thursday early morning, the price of Brent crude surpassed the $100 mark which was the highest for it in the last seven years. Oil prices pared back by a little later on.
Several news agencies including the BBC and CNN reported of multiple explosion sounds from Ukraine capital Kyiv.
There was a 3% surge in oil prices following the news of the Russian military operation but gave up some of the gains later. A 2.75% jump in Brent crude futures, at $99.50 per barrel, was also noted after the Russian military action announcement. At the same time, there was a 3.02% surge in U.S. crude futures which traded at $94.88 per barrel. The price of natural gas increased by 3.33%.
At the time of writing this report, the trading price of spot gold, conventionally viewed as a safe haven asset, was $1,927.67 after rising by 1.05%.
Rising oil prices benefit oil producers while increasing costs for everyone else. And this dampens economic activity as individuals and businesses alike cut back in response to increasing pricing.
Gasoline prices in the United States have risen to more than $3.50 a gallon, the highest level since 2014. If oil prices continue to increase, gasoline prices will almost probably rise more.
Lower-income families would bear the greatest impact because fuel accounts for a higher portion of their household budget.
The Biden administration is clearly alarmed by the prospect.
“I want to limit the pain that the American people are feeling at the pump,” Biden said in a speech on Tuesday. “This is critical.”
Meanwhile, rising natural gas prices may cause an increase in energy and home heating costs. Increasing transportation, electricity, and heating expenses would all contribute to inflation, which is already at its highest rate in 40 years in the United States, but the extent of the impact is debatable.
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Price hikes would be noticed globally, but a decline in Russian shipments would be felt considerably more acutely in Europe than in the United States, given Europe’s reliance on Russian natural gas.
Nonetheless, the European Union has threatened Russia with harsh punishment if it invades.
On Tuesday, German Chancellor Olaf Scholz declared that the Nord Stream 2 pipeline, which has yet to be completed but is expected to transport natural gas from Russia to Europe, “cannot go online.”
Because the pipeline is not yet operational, this does not directly restrict Russian shipments, but it does imply that at least some European politicians are ready to accept potentially significant price rises for diplomatic reasons.
The United States and other nations have been investigating other supplies of natural gas and oil to compensate for a Russian deficit, but given the tight global market, it’s unclear how much might be made available to Europe.