That’s true even for American consumers, even though relatively few Russian exports reach US shores.
“It’s a world market,” said Tom Kloza, global head of energy analysis for the Oil Price Information Service, which tracks gas data for AAA. “We have to compete more for the non-tainted Russian oil that’s available.”
“Removing some Russian banks from SWIFT could result in a disruption of oil supplies as buyers and sellers try to figure out how to navigate the new rules,” Andrew Lipow, an industry consultant, said in a note to clients Sunday. “Bottom line: No funding, no oil.”
Another concern for traders: how to safely get tankers into Russian ports to pick up oil.
“No tankers means no oil,” Kloza said.
The price of a gallon of diesel hit $4 a gallon for the first time in nearly eight years over the weekend. Although few Americans drive diesel-powered cars, most large trucks use it. And just about all goods sold in the United States are moved by truck at some point.
Although Russia’s economy is centered around its energy exports, they are not the only Russian products the West uses. The US bought about $25 billion in goods from Russia last year, not including $4.8 billion in crude oil. That may sound like a lot, but the non-oil purchases amount to only slightly more than half of what US customers bought from tiny Thailand last year.
Commodities such as wheat and lumber are major Russian exports, and those prices have increased on global commodity markets as well. Russia also is a major exporter of such crucial metals as aluminum, palladium, nickel and titanium. Palladium is used in automobiles, mobile phones and even dental fillings. Nickel is used to make steel and electric car batteries. Titanium is crucial to aerospace products, including commercial jets.
Uncertainty about the supply of those products, and the rise in prices on commodity markets, could create “further disruption to global supply chains already suffering from the pandemic and shortages of semiconductors,” said a note Monday from Carsten Brzeski, the global head of macroeconomics for ING Research. That could also feed higher prices as the shortage of computer chips is a major factor in new and used car prices hitting record levels.
“Globally, a surge in commodity prices will aggravate already existing inflationary pressures,” Brzeski said.
Still, the war could also cause the US Federal Reserve and other central banks to actually pull back on their efforts to rein in inflation through higher interest rates. The uncertainty about the overall economic impact could make the regulators even more cautious.