This is true even for American consumers, although relatively few Russian exports reach US shores.
“It’s a global market,” said Tom Cluza, global head of energy analysis for the Oil Price Information Service, which tracks gas data for AAA. We have to compete more for the unpolluted Russian oil that is available.”
“Putting some Russian banks out of the Swift system could disrupt oil supplies as buyers and sellers try to figure out how to deal with the new rules,” Andrew Lebow, an industry consultant, said in a note to clients on Sunday. “The bottom line: no financing, no oil.”
Another concern for traders: how to safely transport tankers to Russian ports to pick up oil.
“No tankers means no oil,” Kloza said.
Diesel hit $4 a gallon for the first time in nearly eight years over the weekend. Although few Americans drive diesel cars, most large trucks use them. Almost all goods sold in the United States are transported by truck at some point.
Although the Russian economy is centered around its energy exports, they are not the only Russian products used by the West. The United States bought about $25 billion in goods from Russia last year, not including $4.8 billion in crude oil. That might sound like a lot, but non-oil purchases amount to just over half of what American customers bought from tiny Thailand last year.
Commodities such as wheat and timber are major Russian exports, and these prices have increased in global commodity markets as well. Russia is also a major exporter of base metals such as aluminium, palladium, nickel and titanium. Palladium is used in cars, cell phones, and even dental fillings. Nickel is used to make steel and electric car batteries. Titanium is important to aerospace products, including commercial aircraft.
A note on Monday from Karsten Brzeski, global head of macroeconomics, said uncertainty over the supply of these products, and higher prices in commodity markets, could create “further disruption to global supply chains already reeling from the pandemic and semiconductor shortages.” For ING Research. It can also drive up prices as the shortage of computer chips is a major factor in driving new and used car prices to record levels.
“Globally, higher commodity prices will exacerbate already existing inflationary pressures,” Brzeski said.
However, the war could also cause the US Federal Reserve and other central banks to actually roll back their efforts to rein in inflation by raising interest rates. Uncertainty about the general economic impact may make regulators more cautious.
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