U.S. Dollar Rises – Triggers Price Increase

Today oil is down slightly as a rising US Dollar presents headwinds for commodity prices. This week the dollar hit a two-year high as commodities continue to take a dip. A rising dollar makes oil more expensive for other countries who must trade their weaker currencies for USD before buying the oil; this rising cost globally reduces demand and, in turn, the price of oil in dollars. The rising strength of the dollar adds pain for other countries who must convert currencies beforFe purchasing oil, at a time when oil prices are already at historic highs. Today WTI crude opened the morning at $101.76, diesel at $4.4500, and gasoline at $3.3720.

The U.S. dollar reached a two-year high this week due to the ongoing Chinese lockdowns and Federal Reserve rate increases. Investors are flocking to the haven of the US Dollar, and higher interest rates make highly secure US bonds even more appealing. Last week the stock market fell sharply in its worst day since October 2020 as world events continue triggering uncertain market reactions. Today Russia announced a “retaliation” move: Russian energy company Gazprom would stop sending gas to Bulgaria and Poland. This has further escalated the tense situation on the border with Ukraine, with Russia now deliberately attacking opposing economies. This week, European Commission President Ursula von der Leyen stated that Russia has resorted to “blackmailing” the EU, while adding that Russian fossil fuels in Europe would swiftly be ending.

With the push for Europe to completely cut off Russia from its energy supply needs, many countries are laying out plans for a transition. The Germans have said now that they plan to become completely independent of Russian oil imports, with many of their buyers finally backing out of previously planned import agreements and the government taking over the PCK Schwedt refinery. Having major economies like Germany progressing this fast is a sign that out-right energy sanctions on Russia could be back on the table – which could mean steeply higher fuel prices in the future.