The stock market dropped during early trading Monday after the U.S. benchmark oil index briefly touched its highest level since the Great Recession.
The Dow Jones Industrial Average, an index measuring 30 major U.S. corporations, dropped 1.20% early Monday morning.
The S&P index, which measures 500 of the largest publicly-traded companies, fell more than 1.39% while the NASDAQ, an index largely comprised of technology firms, declined 1.75%.
Late Sunday, the benchmark West Texas Intermediate crude oil futures hit more than $130 per barrel for the first time since July 2008. The index remained high on Monday, hovering above $118 per barrel, up more than 3%.
“Oil is rising on the prospect for a full embargo of Russian oil and products,” Again Capital partner John Kilduff told CNBC. “Already high gasoline prices are going to keep going up in a jarring fashion. Prices in some states will be pushing $5 pretty quickly.”
Secretary of State Antony Blinken said that the U.S. was engaged in “very active discussions” with Western allies about implementing a ban on Russian oil imports during an interview Sunday. The White House balked at including such a restriction in previous rounds of economic sanctions targeting Russia, arguing it would hurt American and European consumers.
“I spoke to the President and the cabinet, the leading members of the cabinet, about this just yesterday from Europe,” Blinken told NBC News. “And we are now in very active discussions with our European partners about banning the import of Russian oil to our countries while, of course, at the same time maintaining a steady global supply of oil.”
Last week, two dozen bicameral Democrats and Republicans, led by Senate Energy and Natural Resources Chairman Joe Manchin, upped the pressure on President Joe Biden to implement a ban on Russian oil, introducing legislation restricting imports. House Speaker Nancy Pelosi also said she would back an import ban.
The U.S. imported more than 670,000 barrels of oil per day from Russia in 2021, U.S. Energy Information Administration data showed. Europe imports about 27% of its oil from Russia, according to the latest European Union figures.
Meanwhile, gasoline prices, largely determined by oil prices, have surged in recent weeks
In Florida gas prices skyrocketed last week to the highest levels in a decade. Prices at the pump rose an average of 44 cents per gallon in the last five days, reaching an average price of $3.97 on Sunday.
“Unfortunately, more price hikes are on the way and drivers may soon begin to see record-high prices at the pump,” said Mark Jenkins, spokesman, AAA – The Auto Club Group. “Gas prices are being dragged higher by sky-high oil prices, which are surging in response to the conflict between Russia and Ukraine. Sanctions and regulations against Russia has limited its ability to sell its oil on the global market, thus intensifying global supply concerns in what was already a very tight market due to the pandemic.”
The U.S. price of oil surged 26% last week, rising a little more than $24 per barrel. An increase of that magnitude translates to a 60 cent increase at the pump. So far, the state average has increased 44 cents since last week, which means another 10-15 cent hike is possible.
If that happens, the state average would eventually surpass the previous all-time high, moving toward around $4.12 per gallon. The current record high price for regular unleaded gasoline in Florida is $4.08 per gallon, which was set on July 16, 2008.
- On Sunday, the national average price for gasoline reached $4 a gallon for the first time since July 2008.
- When the state average exceeds $3.97 per gallon, Florida gas prices will officially be the most expensive in 14 years (July 2008).