Oil prices were already high coming into 2022: According to AAA, the US hasn’t seen prices this high since 2014. Now, Russia’s recent invasion of Ukraine has them soaring above $100 a barrel.
Prior to the full-scale invasion, US diplomat David Rundell– who is a partner at Arabia Analytica, a consulting firm which works with oil companies in the Middle East– warned a new axis of oil is emerging that will drastically impact our global financial system and our wallets.
“Oil demand is returning to pre-Covid levels, and it is likely to rise throughout this decade,” said Rundell. “Russia and Saudi Arabia are the world’s two largest oil exporters. The energy axis that has emerged between Beijing, Moscow and Riyadh is based on solid economic interests and has begun to develop a political component.”
Sources say that markets are on high alert for signs that Russia’s supplies are threatened, either through US sanctions, damage from a potential war or Moscow deciding to weaponize energy.
During a national address on Thursday, President Biden promised to shield Americans from the impact of rising energy prices after he announced the implementation of further sanctions on Moscow that experts predict could drive pump prices closer to $4 a gallon.
“I want to limit the pain the American people are feeling at the gas pump. This is critical to me,” said Biden.
According to the International Energy Agency, Russia is the world’s second-largest oil producer and exporter of crude oil, making up roughly 12 percent of the global crude trade, and 17% of the world’s natural gas exports.
Any disruption to Russia’s oil flows would “easily” drive up crude prices to $120 a barrel, JPMorgan recently warned.
Biden did say US officials are “executing a plan in coordination” with both oil producers and consumers to shield the public from price spikes, and suggested the United States could release more oil from emergency reserves, with other countries doing the same.
As for Arkansas, although the state usually fairs on the cheaper end when it comes to national gas prices, consumers are currently seeing average prices of $3.16 per gallon, compared to about $2.26 per gallon only a year ago. And there doesn’t seem to be much hope for improvement any time soon.