Crude oil prices surged to roughly $100 a barrel Thursday morning as Russia invaded Ukraine, spelling possible trouble for gasoline prices and the post-covid economic recovery.
The price of Brent crude oil, a common benchmark, rose nearly 8% to over $101 in Thursday trading. West Texas Intermediate, another benchmark, also jumped 8%, to $99.30.
Russia is the world's second-biggest producer of natural gas, behind the United States, and the third-largest oil producer, behind the United States and Saudi Arabia, according to Energy Department data.
Fears that its exports could be curbed - through sanctions, pipeline damage or Moscow's own choice, to punish the West - are fueling the price spikes, analysts said.
Some, however, have cautioned that initial price increases could subside if Russia exports remain unaffected.
The energy-market fallout was particularly acute in Europe, where natural gas prices surged by more than 40%, to 125.5 Euros per megawatt-hour (about $140). Russia supplies about a third of Europe's natural gas through a series of pipelines. A prolonged spike in those prices would feed through to inflate home heating bills.
Gasoline prices for American consumers have shot up nearly $1 per gallon in the past year, mostly linked to returning demand as pandemic fears ease. But concerns about a Russian invasion of Ukraine have further spiked gasoline prices in recent weeks.
U.S. motorists paid $3.53 per gallon at the beginning of this week, according to the Department of Energy, as world leaders warned Russia's invasion was imminent. In November, when Russia began mounting troops at the Ukrainian border, gas prices were nearly 15 cents lower.
"The U.S. economy is not walled off from Russia's invasion of Ukraine," Mark Hamrick, senior economic analyst at Bankrate, said in a note. "Oil prices have been rising and are rising amid the growing tensions and that's going to exacerbate already high inflation."
Inflation is running at the highest rate in 40 years, causing particular trouble for low-income consumers.
THE WASHINGTON POST