The rising tensions between Russia and Ukraine may seem like they're happening a world away. But if Russia does decide to invade — and U.S. defense officials warn such an invasion could happen at any time — it could directly impact wallets in the U.S.
That's because Ukraine is an exporter of key commodities like oil and wheat. And with inflation already at historic highs, further price increases could have further-reaching implications.
Below are four ways that a potential Russian invasion of Ukraine could impact the economy.
Ukraine is one of the world's top oil producers and fears of a potential invasion have already pushed up the price of crude oil, which is already approaching $100 a barrel.
"The conflict between Russia and Ukraine is likely to push crude oil prices above $100 a barrel sooner than earlier projected," said Naeem Aslam, chief market analyst with AvaTrade, according to CNN. "The potential jump in oil prices depends on what sort of sanctions the United States of America and its allies are likely to impose on Russia if it actually invades its neighbor."
AAA reports that gas prices are already been on the rise in most of the U.S.
Reuters reports that Ukraine has emerged as a key exporter of wheat and corn in the last decade. This year, the country had hoped to become the world's No. 3 wheat producer and the No. 4 corn producer.
But a military conflict with Russia would severely hamper those efforts, and a lower global supply of those key commodities could drive up prices of essential grocery items, like bread.
The U.S. is already experiencing inflation rates it's not seen in 40 years. As the country emerges from the COVID-19 recession, firms are paying higher costs to make products due to supply chain issues, and companies are passing those costs on to consumers. The result has been higher prices on everything from groceries to housing.
The government fights inflation by raising interest rates — which means American citizens and companies will need to pay higher rates on loans. The Federal Reserve has already signaled its intention to raise interest rates in March.
But if Russia decides to invade Ukraine and the inflation rates increase, it may further impact the Fed's decision to raise prices.
Every stock market is a global market. Events that happened thousands of miles away routinely impact people's stock portfolios around the world.
Markets have already taken a hit amid fears of a Russian invasion of Ukraine. On Friday — the same day that the Pentagon warned that Russia could be imminent — the S&P 500 lost 1.9%.
Should military actions commence, markets could continue to sell riskier assets and move toward more stable investments like bonds or gold.