Oil crisis 2.0 - this time it could cover the whole world

America has not yet forgotten the oil crisis of the 70s and 80s that pushed the economy into stagflation and twice into a recession, while today, 50 years later, it may appear the second part of the oil and energy crisis. However, it threatens not only the United States, but the whole world.

WTI Crude Oil rose on Wednesday to around $ 126 a barrel as the US introduced an immediate ban on the import of Russian oil and other energy resources, and the United Kingdom announced a gradual withdrawal from Russian oil imports by the end of 2022.

What will happen when Europe gives up Russian oil?

The actions and announcements of actions by the USA and Great Britain may have increased concerns about the supply of raw materials. Analysts warn that oil could reach a new all-time record if Europe chooses to join its allies. This is related to the high dependence of European countries on Russian energy supplies, which in the case of oil account for nearly 60 percent of the total.

Private oil companies, including BP and Shell, announced that they were withdrawing from doing business with Russia, with Shell immediately halting all purchases of Russian oil and closing its gas stations in the country. 

Crude oil prices have already risen by over 30 percent. since Russia's invasion of Ukraine. Fears of supply disruptions and escalating sanctions may contribute to the increases. The return of Iranian oil to world markets could alleviate the situation and lead to price reductions, but it is still surrounded by a lot of uncertainty.

The Federal Reserve in a leisurely pursuit of inflation

In the foreign exchange market, the US dollar seems to be stabilizing after the earlier strong appreciation. The USD performance may be affected by the position of the Federal Reserve on interest rates and, possibly, a decision to raise them. It may collapse as early as next week. Federal Reserve it may raise interest rates by 25 basis points, but Fed chairman Jerome Powell has also paved the way for more aggressive moves should high inflation persist. We will get to know the US inflation report tomorrow, and it is expected that the price dynamics in February reached the highest level in many decades - 7,9%.

In the 70-80s. The Fed raised interest rates rapidly to chase down inflation. Right now, however, the pursuit is likely to be much calmer, and real interest rates may still remain negative for long periods of time.