The invading forces of Russia against Ukraine has been a potential financial crisis for the global economy for some time now. Experts knew that there would be a surge in oil and gas prices for the United States consumer. This crisis now comes while many American citizens were struggling to pay the cost of the pump.
Forbes indicated that Russia was the second-largest producer of crude oil and condensed natural gas in 2021. They provided 10.1 million barrels of oil per day to the global market. The United States is first producing 11.3 million barrels a day, and Saudi Arabia comes in third with 9.3 million barrels in a day. The problem is that America uses 17 million barrels each day, so our economy is dependent on foreign oil and therefore vulnerable.
We depend on Russia for approximately 7% of the oil that we use in America. So we will have a hard time replacing the oil we now have lost because of the sanctions imposed by the White House. According to Forbes, the price of a barrel of oil could spike to between $5 to $20 above the height that it is already at due to the war in Ukraine. And this week oil prices were higher than they have been since 2014. So the threat of the price going even higher is daunting.
President Biden said that the United States was imposing what he described as “crushing sanctions” against Russia.
Putin’s move and Biden’s response just increases the runaway inflation and creates chaos for the Federal Reserve and other central banks.
“Russia invading Ukraine has added to an already tense year, with investors selling first and asking questions later,” said Ryan Detrick, chief market strategist at LPL Financial.
The Federal Reserve was already committed to raising interest rates to fight soaring inflation and now bankers have to juggle the need to slow down the economy to bring down prices and stimulate the economy to keep away recession.
Neil Shearing, the chief economist for Capital Economics wrote, “There’s clearly a lot less scope for them to actually loosen now given how tight labor markets are and how difficult a problem inflation is.”
Another low number that will be trouble for America is the number of people who have confidence that the present White House administration has what it takes to pull the country out of this decline.