Wall Street suffered its largest drop in over a year Monday, as another jump in oil prices threatened to squeeze inflation’s grip on the global economic system.

After a barrel U.S. crude oil jumped to $130 overnight , the possibility that the U.S. might ban imports from Russia, the S&P 500 suffered a 3% decline. This was the largest drop in the past 16 months. Stocks across the globe also fell earlier in today’s trading session, following the oil’s movements.

The benchmark S&P 500 dropped 122.78 points, to 4,201.09. The Dow Jones Industrial Average dropped 797.42 point, or 2.4% to 32,817.38.

The Nasdaq composite dropped 482.48 points or 3.6% to 12,830.96. This tech-heavy index now stands at 20.1% below the record it set in November. This is a sign that the index is in what Wall Street refers to as a bear market. The S&P 500 has fallen 12.4% from its January peak.

The price of gold and some nervousness on Wall Street rose as well, although not as much as oil prices reached their peak. After briefly rising above $2,000 per ounce, the price of gold settled at $1,995.90. This was an increase of 1.5%.

“This could drag on for a while, as tensions in Ukraine continue, as oil prices remain high,” stated Sam Stovall (chief investment strategist at CFRA). “The greater the economic impact of high oil prices on economic growth, the longer they remain elevated, the higher they will go.”

Recent fears that Russia’s invasion in Ukraine could cause a sharp rise in oil prices have caused them to soar. Russia is the largest oil producer in the world. Oil prices rose due to the demand for more fuel from the global economy after the coronavirus-caused shut down.

In a letter she sent to her colleagues Sunday, Nancy Pelosi, the U.S. House Speaker, stated that the House was currently exploring strong legislation to further isolate Russia in light of Ukraine’s attack. She suggested that this could include an embargo on Russian oil imports and energy products.

This is a significant step the U.S. government has yet to take, despite numerous moves to punish Russia. However, the White House stated that it hopes to limit disruptions in oil markets. It is determined to reduce price increases at the gasoline pump.

According to reports, officials from the United States may also be looking at easing sanctions on Venezuela. This could allow for more crude oil to be available and reduce Russian supply concerns.

After breaking the $4 barrier Sunday, a gallon of regular costs on average $4.065 in the United States. This is the first time that the barrier has been broken since 2008. AAA reported that a gallon of regular cost $3.441 on average a month ago.

After previously touching $130.50, a barrel of U.S. crude oil was settled at $119.40, an increase of 3.2%. Brent crude oil, an international standard, was settled at $123.21 per barrel, up 4.3% from $139.

Stocks of smaller companies also dropped sharply. The Russell 2000 index dropped 49.57 points or 2.5% to 1,951.33.

Recent market swings have been triggered by concerns about Russia’s invasion of the region, which could lead to higher prices for wheat, oil and other commodities in the region. This will inflame already high inflation. The United States saw prices rise at an unprecedented rate last month, surpassing their level a year ago.

The conflict in Ukraine also threatens food supply in certain regions, including Europe and Africa, which rely heavily on the fertile landlands of the Black Sea region, also known as the “breadbasket” of the world.

The war places additional pressure on central banks all over the globe, with the Federal Reserve set to increase interest rates for the first time in 2018 later this month. Higher interest rates slow down the economy and will hopefully help to curb high inflation. However, if the Fed raises rates excessively, it could lead to a recession.

“Their reaction on geopolitics cannot really be measured, so that’s why there’s uncertainty about that,” stated Sameer Samana (senior global market strategist, Wells Fargo Investment Institute).

Some investors see the conflict in Ukraine as a potential catalyst for the Fed to ease up on rate increases. Low rates are a favorite of investors because they boost stock prices and other markets.

However, this may not be the case for all cases, Goldman Sachs economists said in a report. The threat of a sustained, high level inflation looming over the economy is greater with the potential for prices for wheat, oil, and other commodities to rise even further. This could change the Fed’s conventional playbook.

Jan Hatzius, a Goldman Sachs economist, wrote that interest rates have fallen for many decades because of economic, financial and political shocks.

Companies are also taking their own sanctions against Russia as a result of the invasion of Ukraine. Companies that have left Russia include Mastercards, Visa, American Express, and Netflix.

Despite all financial pressure, the Russian ruble’s value continued to fall. It fell 12% to 0.7cs.

The yields on Treasury bonds increased. The 10-year yield climbed to 1.78%, from 1.72%.