With Vladimir Putin ordering a troop movement into Ukraine, global markets were turbulent. European markets fell, following a sharp sell-off, as did markets in Asia, in addition to the decline in Dow futures.
Putin’s obsession with Ukraine sent financial markets tumbling last week, with the Dow alone losing more than 650 points in the past week, or nearly 2%.
But the biggest reaction was in the oil markets, as US crude oil prices jumped more than 5%, while global crude oil prices reached nearly $100 a barrel.
Russia is the world’s second largest producer of oil and natural gas, and any supply disruption due to fighting or sanctions might push up global oil prices.
This means a direct impact on several markets in the world, including the United States, where oil prices have jumped to a 7-year high, the rate exceeding $3.50 per gallon, up 20 cents in the last month.
But it is not just regarding the fuel pumps, as all costs of energy, home heating, electricity, jet fuel and other business and transportation costs are expected to rise, which in turn will lead to higher prices for the consumer.
One analysis estimates that if the price of oil reaches $110 per barrel, inflation is expected to exceed 10% in America, and this may put pressure on the Federal Reserve to raise interest rates to curb this inflation.
This increases borrowing costs for everyone out there, which means that fixing the inflation problem will bring another problem, higher borrowing costs.