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CMEDIA: Canadians are expected to be reportedly challenged by even higher prices of gas and food following Russia’s attack on Ukraine.
Russia is an energy superpower but its limited exports of crude oil and natural gas weigh heavily on markets.
“Russia’s invasion of Ukraine will have obvious effects on the price of oil and gas, as these two markets are also connected,” Werner Antweiler, director of the Sauder School of Business Prediction Markets at the University of British Columbia, said in an email.
Antweiler added that Energy economists expect the war in Ukraine to unsettle markets and raise crude prices well into the range of between US$100 and $120 per barrel.
Russia’s attack on Ukraine Thursday jostled the markets, with Moscow’s stock exchange suspending trading briefly before experiencing serious losses.
The threat to limit Russian energy exports would be the most powerful weapon that NATO has at its disposal to convince Putin to end his incursion into Ukraine.
Russia currently pumps about 10 percent of the world’s supply of crude oil every day.
Canada imports roughly $550 million worth of crude oil a year from Russia, according to the Canadian Association of Petroleum Producers, most of which is consumed in Eastern Canada.
And Nuttall says the U.S. imports even more than that.
Besides the Energy market, global food markets will also be affected, as Ukraine is a major global supplier of crops like corn and wheat, and Russia is not far behind.
Canada being the major wheat exporter would feel conflict’s impact directly.
“If Europe is not able to get Ukrainian wheat, they’re going to be looking for some somewhere else,” said David Quist, executive director of the Western Canadian Wheat Growers Association, in an interview.
“If Ukraine, which is a major grower exporter, is not producing this year, there’s going to be a global shortage. And so that will cause prices to rise.”
The trend of rising inflation due to higher food prices is tackled by central banks by raising their interest rates.
The Bank of Canada’s latest interest rate decision would reportedly be announced next Wednesday, and it is anticipated that its benchmark rate would be raised by at least a quarter of a percent, to 0.5 percent.