Matt Bush, FISM News
Diplomats from America and all over the world have done everything possible to try and talk Putin out of war with Ukraine. As loud blasts rang out through multiple Ukrainian cities early Thursday morning, it became evident that those diplomatic efforts did not work.
While it is clear Americans will not join in the actual physical fighting and therefore will not be under direct fire from Russian forces, it is equally clear that the results of the Russian invasion will affect every American in a variety of ways, perhaps most noticeably in their wallets.
The price of oil has been rising for the past year, but as Russian tensions continued to increase, that rise became even more dramatic. In fact, for the first time since 2014, when gas prices reached an average high of $3.70/gallon, the price of a barrel of oil has surpassed $105.
According to CNN, Russia is the world’s second largest producer and exporter of crude oil with about five million barrels per day being sent overseas. That is about 12% of the global crude trade. Sanctions from America and the rest of the west will almost definitely include crude oil, and Robert Yawger, vice president of energy futures at Mizuho Securities, said, “Global supply is already tight. We cannot afford to lose any barrels, let alone 5 million barrels.”
The White House, according to CBS News, is considering another release from the Strategic Petroleum Reserve. There has been no talk from the White House about increasing domestic oil production, but this recent article from Fox News highlights the differences between Trump-era energy production policies, which led to energy independence for the US, and those that the Biden Administration are currently championing, which effectively destroyed that independence.
Outside of the pump, the Ukraine war could also be another hit to an already struggling supply chain in America. According to CBS News “both Russia and Ukraine are also large agricultural suppliers, sending wheat, rye, barley and other grains to Central Asia and the Middle East. Disruptions in commodities could send global food prices higher, putting pressure on U.S. consumers.”
Russia also produces half of the world’s palladium and smaller amounts of platinum and nickel, all key components of microchips and other technological devices.
The conflict is now affecting stock markets and currencies around the world. Reuters reports that European stock markets fell 4% and that Wall Street opened 2.5% down, with some traders saying that Ukrainian and Russian markets are untradeable. The Rouble weakened 7% and the Moscow stock exchange fell by 40%, while the Ukraine suspended trading its currency.
The U.S. will continue to push forward with sanctions as the consequences Russia must face for waging war. Biden has targeted Russia’s elite. The sanctions have affected Russia’s two largest banks, cutting them off from western financing, and there is strong consideration of export controls being announced soon. The U.S. is also, in what President Biden describes as a purely defensive maneuver, moving troops into NATO countries bordering Russia on the west.
While the sanctions are necessary, they will not be without retribution from Russia, one of which could be a halt to crude oil exportation. With the war just starting, it is clear that Americans will be impacted. The severity of that impact will be seen in the coming days and weeks, as the response from the Biden Administration continues to unfold.