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Oil, wheat prices surge as Russia invades Ukraine

The price of oil jumped Thursday following Russia’s invasion of Ukraine.
Kat72/Getty Images/iStockphoto
The price of oil jumped Thursday following Russia’s invasion of Ukraine.

The prices of oil and wheat jumped Thursday following Russia’s invasion of Ukraine.

Crude oil prices reached an eight-year high this week, nudging past $100 per barrel Thursday after days of tension leading up to the invasion. Russia is one of the world’s biggest producers and exporters of crude oil.

Patrick Barkey with the University of Montana Bureau of Business and Economic Research says the news follows the ups and downs of oil during the pandemic, with demand currently high and production low.

“We’ve all seen how volatile these markets can be and certainly there’s very few things that inject more uncertainty into markets than a war,” Barkey said.

Montana Petroleum Association executive director Alan Olson says higher crude oil

prices tend to also drive up the cost of gasoline at the pump.

“You look at the refining level, the price of crude oil makes up about 52 percent of the price of gasoline and diesel fuel, home heating fuel, jet fuel, so on and so forth,” he said. “And as the price of crude oil goes up, those costs go up at the refining sector as well.”

The last time the cost of oil per barrel broke past $100 was 2014.

Worldwide grain prices also spiked on Thursday – which could benefit Montana farmers, though some traders fear Russia’s military action will interrupt exports from both countries.

Russia, Ukraine, and the United States are all top wheat exporters. Experts say sanctions linked to the invasion will likely disrupt Black Sea trade routes.

Wheat prices are now hovering around $10 a bushel – about $3 higher than a year ago, according to Montana Grain Growers Association president Tryg Koch. And, he says, Montana farmers could use a boost.

“For a lot of our producers on the east side, they’ve never seen it this dry and they just came off of the worst drought probably in the last hundred years last year,” Koch said.

How long that drought will last is as unknown as how the war in Ukraine will affect wheat prices longterm. In 2019 Russia and Ukraine accounted for a quarter of global wheat exports; the United States’ share was 16%.

Kayla writes about energy policy, the oil and gas industry and new electricity developments.
Edward O'Brien is Montana Public Radio's Associate News Director.