2M people have now fled Ukraine, including 1Mchildren, the UN says. The CIA predicts an “ugly next few weeks” as President Putin escalates Russia’s military aggression.
Stocks ended the day lower after a roller-coaster trading session fueled by fast-moving Ukraine updates. Oil and gold prices continued jumping as investors retreated to “safe-haven” assets. FYI: the techy Nasdaq index entered a bear market this week, down more than 20% from its record high in November.
Sanctioning where it hurts… in the barrel. President Biden announced a halt on Russian oil imports in response to Putin’s escalation in Ukraine. FYI: oil makes up a third of Russia’s economy. Even worse for Putin: the EU said it would cut Russian gas imports by two-thirds by the end of this year, even though it’s much more reliant on Russian energy than the US. Europe depends on Russia for nearly half of its gas supply and a quarter of its oil. The US gets only 7 % of its oil from Russia.
Pump anxiety… Reduced supply from Russia is causing gas prices to spike even higher. The average price of a gallon in the US hit a high of $4.10 yesterday, topping $7 in some places. And it’s not just crude that’s gone haywire. Russia and Ukraine are big exporters of other key commodities, which are also surging on fears of reduced supply:
- Costly Corn Flakes… Wheat and corn prices have spiked as the war strains supplies of global grains: cereal giants Kellogg and General Mills were already hiking prices before the war.
- Expensive-er EVs… The prices of precious metals like titanium, palladium, and nickel — critical for everything from EV batteries to airplane bodies — have soared hurting companies from BMW to Boeing
Replacing Russian oil is the easy part… at least for the US (aka: the world’s #1 oil producer). Oil giants could drill more domestically, and Biden could boost imports from allies like Canada and Mexico. But taming global commodity prices is a different ballgame. Supplies of gas, grains, and metals are subject to geopolitical changes beyond any one country’s control — and that affects prices for everyone.