Middle East Situation Creates Long-Term Inflationary Risks: Central Bank

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Oil prices have a limited impact on the ruble exchange rate and the Russian economy, with global inflation driven by the Middle East crisis potentially exerting a greater influence, according to Kirill Tremasov, an advisor to the Chairman of the Bank of Russia.

"We are already seeing inflation rising in many countries around the world, but so far this increase remains fairly moderate. However, the longer the uncertainty persists in the Middle East, the greater the risks associated with the overall economic situation and the risk that energy prices could rise even further," TASS quoted him as saying.

He believes that the current large oil reserves are still keeping prices at a relatively acceptable level, but if the situation continues and these reserves are depleted, there will be a "sharp increase in energy prices, followed by a rise in the cost of everything else." Fertilizer prices have already started to rise, and agricultural products will soon follow suit.

"This situation in the Middle East clearly creates long-term pro-inflationary risks," Tremasov concluded.