CHICAGO (NewsNation Now) — U.S. markets pointed toward a sharply lower open following a global plunge and a surge in oil prices Thursday after Russian President Vladimir Putin launched military action in Ukraine.
Energy prices surged, fueling inflation fears. The spot price in Europe for natural gas, which the continent relies on Russia to supply, jumped as much as 31%.
Brent crude oil, a blend of light, sweet crude produced in the North Sea, jumped above $100 per barrel in London for the first time since 2014 on unease about possible disruption of supplies from Russia, the No. 3 producer. Benchmark U.S. crude was close behind at $99 per barrel. Prices of wheat and corn also jumped.
Global oil prices have steadily increased over the last two months as the threat of an invasion loomed. They’re now 40% higher than they were in early December.
Meanwhile, this may cause Americans to feel the effects trickle down at the pump.
According to AAA, the average price of a gallon of gas is $3.54 as of Thursday, which is nearly a dollar more than last year’s average of $2.60.
Analysts say unless we see a quick resolution, the average national gasoline price could hit $3.75 per gallon by early March — its highest price in nearly a decade.
Analysts believe that Brent is likely to remain above $100 a barrel until significant alternative supplies become available from OPEC, U.S. shale or Iran, for example.
The price for oil on international markets rose to $101.27, while West Texas Intermediate soared $7.65 to $99.75 per barrel in electronic trading on the New York Mercantile Exchange. The contract fell 25 cents to $92.10 on Wednesday.
In Asia, the Nikkei 225 in Tokyo fell 1.8% to 25,970.82 and the Hang Seng in Hong Kong lost 3.2% to 22,901.56. The Shanghai Composite Index shed 1.7% to 3,429.96.
Analysts are warning of inflationary pressure on the global economy from $100 oil, especially for Asia, which imports most of its energy needs.
“Asia’s Achilles heel remains its vast import needs for energy, with surging oil prices bound to take a hefty bite out of income and growth over the coming year,” said HSBC economist Frederic Neumann.