Editorial Note: We earn a commission from partner links on Forbes Advisor. Commissions do not affect our editors’ opinions or evaluations.
Energy markets have woken up to the reality of Russia’s war in Ukraine today. U.S. crude oil prices spiked to $130 in the pre-market, a 13-year high, as headlines suggested that Europe and the U.S. were discussing a ban on Russian oil exports. Oil is back around $119 midday, but stock markets remain deep in the red.
As of midday, the Dow Jones Industrial Average (DJIA) is down 1.9%, the S&P 500 is down 2.2% and the Nasdaq Composite is down 2.3%.
If oil were to rise back above $130 and stay there, market experts believe that average U.S. gasoline prices could spike above $4.50 a gallon.
Traders are watching oil and other commodity prices—not to mention the Federal Reserve and interest rates—as the Russian invasion of Ukraine grinds through its second week.
If the price gains in oil are sustained, that could add about $0.30 or $0.40 a gallon to the price of gasoline—and as much as a half-percentage point to annual Consumer Price Index (CPI) inflation, which is already running at 7.5%.
Stock Market Uncertainty on Oil and Fed Policy
The price of oil is central to the impact of Russia’s war since crude prices drive up inflation and slow down the economy. What happens with the price of oil will also have a big impact on whether the Fed pursues aggressive interest rates hikes starting at the…
