June 28, 2022, 11:43 am EDT
Energy and Wars
There is a strong correlation between energy prices and wars. The most obvious example is the recent war between Russia and Ukraine. The war pushed up crude oil prices from $95 to $120-130 range on February 24, 2022. It pulled back in the past couple of weeks but stay nearly $110 per barrel. Since we think inflation heavily depends on the energy price, the important question to ask is what do we know about the wars.
Currently, the G7 summit is happening in Germany for the 7 leaders of the developed industrial countries to discuss the war, energy, food, etc. At the same time, Russia met with Belarus to set up nuclear facilities to extend the fight. Also, yesterday Russia bombed a shopping mall in Ukraine that killing a dozen people there. On the other side, China used airforces and carriers in the Taiwan region. All this background information seems to provide us a picture that the confrontation between the two camps is getting intensified.
It summarizes the coming confrontation globally. Of course, the oil prices and all other commodities (natural gas, metal, food, fertilizer) depend on it to fluctuate up or down. It seems like any triggering events could set up the stage for World War III. When it happens, energy prices, inflation, recession, and food shortage will sweep over the whole world.