When Russia declared war on Ukraine, the United States and its allies retaliated with a different type of force: a financial war. Sanctions are economic restrictions used as a non-military option to penalize countries for certain actions. Many Western countries have enacted sanctions such as restricting Russian banks from cross-border payments and freezing Russian reserves in foreign countries. These are different from previous sanctions in that they are targeting the Russian economy as a whole, rather than just the powerful Russian government.
The United States in particular has stepped up on its financial restrictions, halting specific Russian imports and exports. Many companies based in the U.S. have chosen to stop all operations in Russia. These choices are particularly impactful due to the importance of the U.S. dollar in international trade.
As a result of these penalties, the Russian economy has tanked. Russian cryptocurrency Ruble dropped by 30% when sanctions were first announced, spurring a run on the banks. Russian citizens then turned to gold and other precious metals for financial stability; which increased the price of gold across the globe, hitting an 8-month high in March of 2022.
But the increased cost of gold is not the only international effect of these sanctions. With Russia being the world’s second-largest producer of crude oil, gas prices shot up around the world. In the United States, prices reached an all-time high average of $4.42 per gallon on May 12. The global stock market also suffered, with April of 2022 being the worst April month that the market had seen in decades.