The current events in Ukraine are having a serious and far-reaching impact on global oil markets. With Russia's new offensive, the risk of supply disruption is increasing, which is driving up prices. Here are some reasons why your fuel costs will continue to rise as a result:
1. Russia is Europe's main source of oil supply and will continue to cut off supplies as leverage in the conflict.
2. As the situation escalates, new trade relations with pariah states could further reduce the availability of oil for European countries.
3. Shipping routes are becoming more and more dangerous making it increasingly difficult for shippers to move oil from one country to another.
4. The sanctions imposed by the EU are also limiting access to further sources of Eastern European Oil, which would normally be used for international trade.
5. Insurance companies are also refusing to insure oil tankers, which means that the transportation of oil is becoming more and more expensive.
6. The mass migration of skilled labor and foreign oil expertise out of Russia has left a shortage of the required skills to keep Russian oil moving, thus further limiting supply.
7. Finally, with tensions running high in the region, any disruption could cause prices to skyrocket - making it even more difficult for EU countries to secure reliable supplies of oil.
It is clear that the situation in Ukraine will continue to affect global fuel prices for the foreseeable future. It is our recommendation to our clients to plan accordingly and assume for more inflation to come, as energy costs is a major player when it comes to inflation. This roller coaster isn't close to over yet - so be prepared!
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