U.S. inflation is already at the highest level in four decades. The worsening Ukraine-Russia crisis could push it even higher.
That's because the conflict is threatening to send oil prices above $100 a barrel for the first time since 2014, according to RSM chief economist Joe Brusuelas. Oil prices already surged to a fresh eight-year high on Tuesday after Moscow ordered troops into two breakaway regions in eastern Ukraine, with Brent crude, the global benchmark, hitting $97.63.
"The potential for a broader energy shock to the global and U.S. economies should Russia invade Ukraine has added to a combustible mix of factors that is causing inflation to accelerate in the United States and abroad," Brusuelas said. "That risk carries with it the potential to slow down growth." Germany already halted the certification of the Nord Stream 2 gas pipeline from Russia, while the U.S. and the European Union have floated potential sanctions against Moscow amid reports of continued shelling in east Ukraine. President Biden pledged the U.S. and its allies will respond "decisively and impose swift and severe costs on Russia" in the event of an invasion, although it's unclear what they may look like.
Russian President Vladimir Putin speaks as he attends the G20 summit via videoconference in Moscow, Russia, on Oct. 30, 2021.
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