Global financial markets plunged and oil prices surged after Russia began its long-anticipated attack on Ukraine.
Dow stock futures fell roughly 800 points late Wednesday as investors pulled back amid concerns a prolonged conflict could push up energy prices, add to inflationary pressures and slow economic growth. S&P 500 futures dropped 2% and tech-heavy Nasdaq contracts sank 2.6%. Asia-Pacific stocks also sold off, with markets in Hong Kong and Sydney sliding 3%, while Tokyo and Seoul sank 2%.
The attack began moments after Russian President Vladimir Putin announced that he had “decided to conduct a special military operation” to protect eastern Ukraine’s Donbas region. CBS News correspondents reported hearing loud blasts in the capital city, Kyiv, and in the eastern city of Kharkiv.
A Ukrainian government spokesperson said early Thursday that “cruise and ballistic missile strikes are underway at the control centers” in Kyiv.
Oil prices jumped nearly $3, topping more than $100 a barrel for the first time since 2014, on concerns that the crisis in Eastern Europe could disrupt Russian supplies of crude. Russia accounts for about 12% of the world’s oil supply and provides about 40% of gas to the European Union. Most of that fuel is delivered through pipelines, including in Ukraine, according to Eurasia Group.
President Biden on Tuesday announced sanctions against Russia after Russian President Vladimir Putin sent military forces into Ukraine’s eastern breakaway regions. Experts now predict the U.S. and EU will respond to the latest hostilities with stiffer economic sanctions, potentially inviting Russia to respond with its own measures.
“The attack and sanctions response will have far-reaching impacts on the global economy,” analysts with political risk consulting firm Eurasia Group said in a report. “Oil and gas prices will rise significantly, reinforcing inflationary pressures and weighing on financial markets and global growth.”
Although the U.S. is not dependent on Russian energy, rising global oil costs since late 2021 have driven up prices at the pump for Americans. The national average for a gallon of gas is now $3.53, 21 cents more than in January and 90 cents more than a year ago, according to AAA. The highest ever price for a gallon of regular gas in the U.S. was $4.11 in July of 2008.
“Russia is one of the leading oil producers globally, behind only the United States and Saudi Arabia,” AAA spokesperson Andrew Gross said in a report. “And if they choose to withhold their oil from the global market, such a move would eventually be reflected in higher gas prices for American drivers.”
The S&P 500 fell 1.8% to an eight-month low on Wednesday and is now in “correction” territory, a loss of at least 10% from its recent peak, while the Dow and Nasdaq also finished lower. U.S. stocks have slumped this year on expectations by investors that the Federal Reserve is set to start hiking interest rates as early as next month in a bid to curb inflation.
— The Associated Press contributed to this report.
